Some stocks are quietly outperforming the market and defying the expectations of both analysts and investors. Companies that had struggled for years, been widely criticized, and whose stock had largely been ignored have turned things around and their share price is once again moving higher. This reversal of fortune comes with the stock market at an all-time high and some of the big technology stocks that saw huge moves higher over the past year start to look winded. Investors wanting to extend the gains in their portfolio should consider taking a position in one of these turnaround stocks that have wind in their sails again. Here are the momentum mavericks: three stocks defying gravity and expectations.
The Gap (GPS)
Until recently, expectations surrounding The Gap (NYSE:GPS) were extremely low. The company and stock were mired in long-term decline. However, the company and its share price have staged a major recovery. In the last 12 months, GPS stock has risen 123%, including an 11% gain this year. The stock was so beaten down that it’s trading nearly 10% lower than where it was five years ago even after more than doubling.
The Gap just issued strong financial results for the year-end holiday quarter that showed the company is getting its house in order. The Gap reported earnings per share of 49 cents versus the expected 23 cents per share. Revenue totaled $4.30 billion versus $4.22 billion U.S. that had been forecast among analysts. The company’s earnings got a lift from sales at Old Navy, which grew 6%, the first growth at that unit in more than a year.
Additionally, The Gap’s gross margin rose 5.3 percentage points to 38.9% due to fewer markdowns and lower input costs. And the retailer successfully decreased its inventory by 16% during all of last year. Time to buy GPS stock.
Beyond Meat (BYND)
The stock of Beyond Meat (NASDAQ:BYND) had largely been left for dead in recent years. The company’s artificial meat products had been dismissed as a passing fad among consumers and the company’s sales and stock were steadily eroding. BYND stock today is trading 87% lower than where it was when it made its market debut in 2019. However, an aggressive cost-cutting plan now has Beyond Meat on the cusp of a comeback.
The cost-cutting plan was announced along with better-than-expected earnings, sending BYND stock up 70% in one trading session in February. While the share price has since moderated, the company’s stock is up nearly 50% from the bottom it reached last October when the entire market declined. The reversal comes amid improving earnings and after management said they plan to “steeply reduce” operating expenses.
Target (TGT)
Things are also looking up at Target (NYSE:TGT). It seems like only yesterday that management at the discount retailer was talking about theft, closing stores in troubled neighborhoods, and revising its outlook. Now, the company is issuing earnings that beat Wall Street’s expectations for both sales and profits and launching new sales drivers to ignite future growth. TGT stock has gained 16% year-to-date.
Target recently reported Q4 2023 EPS of $2.98 versus the expected $2.42 per share. Revenue also beat expectations, coming in at $31.92 billion compared to $31.83 billion that was forecast on Wall Street. Target improved its margins in the quarter, lowered its inventory and e-commerce fulfillment costs, and announced plans to implement new sales drivers, including a membership rewards program.
On the date of publication, Joel Baglole did not have (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.
