7 STOCKS TURN UP THE HEAT
Summer is winding down, and stocks didn’t do so hot during August. But the month served up some steaming gains for investors who hung in there in some surprising places.
Seven stocks in the Standard & Poor’s 500, including data management firm NetApp, apparel retailer Urban Outfitters and chipmaker Micron turned up the heat during August, generating gains of 15% or much more, according to a USA TODAY analysis of data from S&P Global Market Intelligence. Those were impressive gains considering the S&P 500 itself didn’t do much — it slipped 0.3% during the month — and less than 30% of individual investors are bullish, says Keith Lerner, chief market strategist at SunTrust.
Still, there was money to be made.
“The S&P 500 didn’t move much in August, although there was some rotation underneath the surface,” says Jack Ablin, chief investment officer at BMO Private Bank.
August isn’t known for being a great time for stocks. The month finishes in 10th place in terms of returns over the long-term, The Stock Trader’s Almanac says. August certainly followed the pattern. If anything, August brought less drama than usual, as it was the smallest move during the month since at least 2010. Investors have seen much worse, including a 6.3% decline in August 2015.
Seeing the big winners in August is a reminder to investors of how winning stocks can be found most times for those who stay invested.
NetApp, the best stock in August, scored a 31.2% gain in just one month.
Owning the best stock of each of the past eight months would have generated a 1,426% gain for investors this year, even as the S&P 500 itself is up less than 7%.
Hindsight is 20/20, but investors are also wise to watch for shifts in the market that can can give clues about sectors and demand in various areas of the economy.
Take Micron, a maker of memory chips used in computers and smartphones. Shares rocketed roughly 20% higher in August to $16.47 as investors started to notice better demand and higher prices for memory, says Weston Twigg, analyst at Pacific Crest. Better pricing for memory chips has been powered by stronger demand for personal computers plus restraint by memory makers to not pump out more supply.
NetApp, though, was the best stock of August after its 31.2% gain to $34.57 a share.
Like Micron, NetApp is in the business of computer data storage, although it is more focused on helping other companies preserve business data. The stock get a powerful lift during August after the company delivered 59% higher adjusted profit during the quarter, topping estimates by 28%. Investors were hungry for upside earnings surprises as S&P 500 earnings growth fell.
Despite the struggles of some major retailers during the summer, trendy apparel seller Urban Outfitters showed investors aren’t throwing out everything in the retail closet.
Urban Outfitters saw its shares soar 20% during August to $35.81.
The market’s pause in August shows that investors are still “far from euphoric,” says Keith Lerner, chief market strategist at SunTrust.
“We are likely to see a greater degree of optimism before this bull market is over,” Lerner says.
August was a reminder that winning stocks can be found just about anytime for those who stay invested.