Why Lendingtree Inc (TREE), Transocean LTD (RIG) and Netflix, Inc. (NFLX) Are 3 of Today’s Best Stocks

Advertisement

Stocks ended sharply higher today, with most of the day’s gains coming in the final hours of trading as traders showed optimism regarding tomorrow’s Federal Open Market Committee meeting. A month ago, the consensus view was that the Fed would finally raise its near-zero interest rates in September … now Wall Street’s a little less certain.

stock market todayThe precipitous Chinese stock market crash, which began in earnest last month, caused the U.S. market to experience its first 10% correction since the U.S. debt ceiling crisis of 2011.

With the dollar strong and inflation at just 1.2% — well below the Fed’s long-term goal of 2% — the case for raising rates this week has lost some of its muster.

That was great for the stock market today, with the S&P 500 up 25 points, or 1.3%, to close at 1,978. Three stocks, however, easily outperformed that benchmark: Lendingtree Inc (TREE), Transocean LTD (RIG), and Netflix, Inc. (NFLX), all of which returned more than 3.5% today.

Lendingtree (TREE)

Shares of online loan marketplace Lendingtree shot 9.8% higher on Tuesday, spurred largely by the broader market rally and the “risk-on” attitude of Wall Street. If investors want risk, there’s plenty to be found in TREE stock, which has ventured as high as $139 and as low as $30 per share in the past year.

But its not just the return to risky assets that had TREE stock rising Tuesday. If the Fed keeps interest rates steady — a decision that will ultimately be clear by Thursday, the last day of the two-day FOMC meeting — then demand for Lendingtree’s services won’t take a hit.

After all, shopping around for mortgages is more appealing when those mortgages are more affordable.

Transocean (RIG)

Shares of Transocean were also on the rise today, jumping 5.2%. RIG stock has been absolutely destroyed in the past year, as plummeting oil prices and a supply glut have reduced the rates Transocean can charge for its offshore drilling rigs, many of which it leases out on a dayrate basis.

So what had RIG stock rebounding today? Oil prices themselves were higher, plain and simple. Crude oil rose 1.1% today, closing at $44.59 a barrel. Transocean shares have a notoriously high “beta” in relation to oil prices, meaning that in general, when oil prices move in a certain direction, RIG shares also move in that direction — except the swings are magnified.

Longer-term, Transocean’s debt and the sustainability of its dividend, which was cut from 75 cents per quarter to 15 cents per quarter in May, remain major concerns for investors.

Netflix (NFLX)

Finally, shares of the streaming video leader Netflix also rallied as the day progressed, swinging from losses of 2.2% in the early morning to end-of-day gains above 3.6%. NFLX stock is one of the most consistently volatile large-caps on Wall Street, and quite frequently there’s no fundamental or qualitative catalyst behind its moves.

Today was just such a day, with the main reason for its rally mainly just being the return to a “risk-on” mindset.

So far, 2015 has been an incredible year for NFLX, with shares up a split-adjusted 103% to-date. The outperformance has been driven by a series of impressive earnings reports, but mainly the incredible growth of Netflix’s subscriber base.

Recently, bears and bulls have been alternately focused on potential competition from Apple (AAPL) and Netflix’s plans to expand into new Asian markets.

As of this writing, John Divine was long Jan 2016 $28 RIG call options and owned AAPL stock. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2015/09/why-lendingtree-inc-tree-transocean-ltd-rig-and-netflix-inc-nflx-are-3-of-todays-best-stocks/.

©2024 InvestorPlace Media, LLC