The selloff in stocks continues. The downturn that began in August and accelerated in September is ongoing as we near the end of October. Since Aug. 1, the benchmark S&P 500 index has declined 7%. The drop in equities has largely been broad-based with few names or sectors spared. That said, there are a few stocks bucking the current downtrend and rising. A handful of well-known companies are seeing their share prices break out and rally, running against the broader market in the process. That is due to both strong financial results and some strategic deals and initiatives that have won the praise of both analysts and investors. A select few breakout stocks are even hitting 52-week highs right now. Investors should pay attention to these moves as they show there is still money to be made in an otherwise down market. Here are three sizzling stocks that are currently on fire.
Nike (NKE)
It looks like Nike’s (NYSE:NKE) stock may have finally bottomed and is now breaking out. In the last month, NKE stock has risen 13% and broken back above $100 a share. The sneaker and apparel company’s share price looks to have hit a bottom of $88 a share on Sept. 28. Since then, the company’s stock has rallied hard while the broader market stagnated. The benchmark S&P 500 index has declined 2% since NKE stock began its current rally.
The upturn in NKE stock comes after the company reported its latest financial results at the end of September. The company’s share price jumped 7% higher immediately after the print and has kept on rising. For its fiscal first quarter, Nike reported its revenue rose 2% from a year earlier to $12.9 billion. That result was slightly less than the $13 billion expected by analysts. However, Nike’s earnings per share (EPS) came in much stronger than expected at 94 cents, beating consensus estimates of 75 cents. Nike reaffirmed its fiscal Q2 and full-year guidance.
Analysts and investors especially liked that Nike’s inventories declined 10% in the latest quarter from a year earlier. NKE stock has now gained 16% over the past 12 months.
Peloton (PTON)
Shares of Peloton (NASDAQ:PTON) rose 15% in a single trading session at the end of September on news that the maker of internet-connected fitness bikes and treadmills has struck a five-year partnership with Lululemon Athletica (NASDAQ:LULU). While PTON stock has pulled back a bit with the broader market, its share price is still up about 7% over the last month. That’s a stark change for Peloton’s stock, which suffered mightily as the pandemic ended and people returned to gyms and fitness clubs.
Under the terms of the deal with Lululemon, Peloton will become the exclusive provider of digital fitness content to the athletic apparel maker that is best known for its yoga pants. Going forward, Lululemon will become Peloton’s primary apparel partner. At the same time, Lululemon will stop selling its Studio Mirror fitness device that competed with Peloton’s internet-connected bikes and treadmills. Lululemon will also discontinue its digital membership tier as part of the deal.
Analysts have said the deal is good news for Peloton, which managed to neutralize one of its main competitors and is also likely to profit from the sale of its fitness content through Lululemon. PTON stock is down 32% over the last 12 months but looks to have bottomed.
Netflix (NFLX)
No stock is breaking out as hard right now as Netflix (NASDAQ:NFLX). The streaming company is back in the good graces of analysts and investors after issuing a stellar Q3 print and announcing that it is further raising prices. In the two days after issuing its latest earnings, NFLX stock has risen 18%, making it one of the biggest winners of the Q3 earnings season. The stock jumped higher immediately after the company announced it added 8.8 million net new subscribers during Q3 compared to the 5.5 million forecasted.
The company also reported EPS of $3.73, which was ahead of the consensus estimate among analysts of $3.49. Revenue for the three months ended Sept. 30 amounted to $8.54 billion, matching Wall Street forecasts. In addition to the strong subscriber numbers, analysts also like that Netflix is again raising prices, lifting the monthly price of its premium subscription plan to $22.99 from $19.99, while the basic plan will increase to $11.99 per month from $9.99 currently. Prices for the ad-supported and standard plans will remain unchanged for now.
NFLX stock is up 44% over the past 12 months.
On the date of publication, Joel Baglole did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
