The 5 Best-Performing Stocks of Last Week

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best-performing stocks - The 5 Best-Performing Stocks of Last Week

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Earnings season and news releases sparked significant increases in many stocks this past week. The best-performing stocks — among mega-caps — spiked as they beat challenges that have dragged their shares down in the recent past.

Last week’s best-performing stocks come from a variety of sectors. Not surprisingly, tech stocks make up the bulk of the companies that made the list. However, the ordinarily lackluster consumer products industry is also represented, and the biggest gainer by far came from retail — and it’s not a retailer who made their name in e-commerce.

These stocks may or may not remain on any best-performing stocks list for the foreseeable future. Regardless, the best-performing stocks of last week have fostered the conditions necessary to ensure some measure of prosperity in the years to come.

Best-Performing Stocks of Last Week: Walmart Inc. (WMT)

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Walmart (NYSE:WMT) made the list of best-performing stocks by reporting an unexpected increase in revenue with its earnings. WMT rose by 9.3% in Thursday trading alone. The company reported earnings of $1.29 per share, beating Wall Street forecasts by six cents per share. It also helped the Dow Jones Industrial Average rise by 396 points.

However, most of the attention revolved around how the company’s revenue. Online sales saw a 40% year-over-year increase. This relieved investors after last quarter’s online sales increase of 23% sparked a massive selloff. In-store sales, which still make up the bulk of company revenue, also surprised to the upside. Same-store sales rose by 4.5%. Analysts had expected an increase of only 2.4%.

Most credited a booming economy, the focus on e-commerce and efforts to improve its stores for Walmart’s increased sales. Still, investors should exercise caution going forward. Admittedly, I guessed wrong on how WMT stock would behave following earnings. That does not change the fact that the forward price-to-earnings (P/E) ratio now stands above 20. While not high by S&P 500 standards, investors should remember that this company needs a good economy merely to see growth in the mid-single-digits.

WMT stock did not deserve the beating it took two years ago when some believed Amazon (NASDAQ:AMZN) would take over retail. It’s now clear that Amazon will fail to take down Walmart, which has responded with an online presence of its own. That said, this relief recovery in WMT stock has probably become overdone. I doubt such an uptick will happen following its next earnings report in November.

Best-Performing Stocks of Last Week: Cisco Systems (CSCO)

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Cisco (NASDAQ:CSCO) also earned a place among best-performing stocks following its earnings announcement. The San Jose-based networking company increased by almost 3% in Thursday trading following the announcement that earnings and revenue had exceeded Wall Street expectations.

CSCO stock saw earnings of 70 cents per share in its Q4. This beat estimates by one cent per share. The company reported earnings of 61 cents per share in the same quarter last year. Cisco reported revenues of $12.85 billion exceeding expectations by $80 million. It also represents a 5.9% increase from the same quarter last year.

After two years of decline, Cisco has shows signs of recovery. An emphasis on software at the expense of its hardware business has driven the revenue increases. As a result, analysts now expect the company to grow earnings at an average rate of 10.3% per year over the next five years. This marks an improvement over the previous five-year period, which saw just over 5% average growth per year.

CSCO still trades about 45% below its 2000 high. Now, regaining that price level could happen without a stock bubble. Its forward P/E now stands at about 15.4.

Furthermore, Cisco has increased its payout every year since it introduced a dividend in 2011. The current dividend yields about 2.9%. With a low P/E, double-digit earnings growth and a high dividend, CSCO stock could again become a desired holding.

Best-Performing Stocks of Last Week: Procter & Gamble (PG)

 

One might not expect Procter & Gamble (NYSE:PG) to make a best-performing stocks list. Especially after it’s latest report — released July 31 — started August on a down note for PG stock. However, the consumer products giant is showing that it’s finally addressing lagging revenues.

Following the immediate response to the earnings report, Wall Street has begun to look favorably on PG. Procter & Gamble announced price increases to address the lagging revenues and it appears this announcement, continues to influence the stock and the industry as a whole. PG stock moved higher this week despite a lack of news from the company. But competitor Kimberly-Clark (NYSE:KMB) announced price increases of their own. This likely tells investors that PG’s price increases can stick.

PG stock still trades below 2017 highs. With the rise in e-commerce, control of shelf space in stores has lost much of its power as a competitive advantage. Consumers enjoy multiple alternatives when it comes to toilet paper, detergent, or shampoo. In such markets, standing out becomes difficult.

Still, the price increases show that the name recognition of products such as Tide, Charmin and Pampers still attracts buyers. Analysts predict average profit growth of 6% per year over the next five years. Moreover, a 3.4% dividend yield from a company that increases its dividend every year should continue to attract income investors. PG’s shallow moat will likely continue to limit growth. But with its name recognition and its dividend, PG stock should remain steady for the foreseeable future.

Best-Performing Stocks of Last Week: Verizon Communications Inc. (VZ)

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Verizon (NYSE:VZ) rose this week on news that the carrier signed deals with Apple and Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) to be the first video provider for a 5G service. Verizon will launch a high-speed 5G wireless service in Houston, Indianapolis, Los Angeles, and Sacramento later this year. Under terms of the deal, Apple and Alphabet will provide the content, while Verizon will support the 5G delivery.

This deal has brought new life to VZ stock, which finds itself both blessed and burdened by the advent of 5G. VZ stock has remained range-bound for more than five years. Verizon faces tens of billions in construction costs for a 5G network over the next few years.

Meanwhile, its current wireless business has seen razor-thin profit margins due to intense competition. All the while, VZ stock maintains an 11-year streak of dividend increases. Breaking such streaks can undermine the stock. So, despite the dividend yield of around 4.3%, the dividend burden will likely become heavier with further annual increases.

However, analysts believe 5G will create new lines of business. Once 5G can start generating revenue, both profits and VZ stock should rise and along with it. VZ currently support a forward PE of 11.7. Since the stock’s current condition appears challenged, Verizon will not frequently appear on any best-performing stocks lists for now. Still, with the current dividend yield, income investors can do well while they wait for 5G to boost VZ stock.

Best-Performing Stocks of Last Week: Apple Inc. (AAPL)

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Apple (NASDAQ:AAPL) moved higher Thursday on relatively little news. One analyst speculated that a $1.25 trillion market cap was now in reach. The non-speculative news proved to be not so optimistic. Apple had to reassure the public that personal data had not been comprised in a recent successful hack by an Australian teenager.

Whatever the news, AAPL stock appears to stand in better shape compared to other companies who support a market cap exceeding $500 billion. Amazon’s market cap has climbed beyond the $900 billion mark on a triple-digit P/E ratio. Although Alphabet and Microsoft (NASDAQ:MSFT) do not support such lofty valuations, their P/E ratios have moved ahead of S&P 500 averages.

Not so with AAPL stock. Despite winning the race to the $1 trillion market cap, Apple appears undervalued in this respect. The forward P/E of AAPL stock only stands at about 16. Earnings may slow modestly. Still, Wall Street expects average earnings growth to hold at 12.8% per year over the next five years. Most tech stocks with such earnings growth usually enjoy higher valuations.

The fact that AAPL stock will have to grow beyond a $2 trillion market cap to double in value may deter some investors. Still, the first trillion is the hardest. And now that this psychological barrier has fallen away, investors could become more comfortable with bidding AAPL stock up to at least an average valuation.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting.

 


Article printed from InvestorPlace Media, https://investorplace.com/2018/08/5-best-performing-stocks-august-13-17/.

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