Last week was the first losing week for the markets in a month, with the S&P 500 falling 2.3%, the Nasdaq by 3%, and the Dow by 1.1%.
Most analysts blamed Fitch downgrading the US credit rating – combined with a softening jobs report – as the reason for the decline.
And to be sure, those were undoubtedly factors.
But in my view, the main reason was the market was due for a pullback anyway. If it didn’t happen last week, it would have happened within the next few weeks anyway.
Just because the market is pulling back, however, doesn’t mean we can’t find some very short-term opportunities to pick up a quick gain.
The first place I like to look is at stocks that have defied the market – rising while the market is falling.
Then I look at which of those stocks has the highest potential to keep that positive momentum going in the following week.
As always, remember to manage your risk accordingly as we’re targeting short-term profits.
Fluor Corporation (FLR)
Global engineering and construction company Fluor saw its shares pop by nearly 18% last week – thanks to reporting Q2 earnings that were substantially ahead of expectations. Its adjusted earnings-per-share of $0.76 for the quarter far surpassed the consensus estimate of $0.43.
It also boosted full-year earnings guidance from $1.50–$1.90 per share to $2.00–$2.30 per share – a significant increase.
This positive stock price movement comes on the back of Fluor selling off its South American operations back in March – which heightened the uncertainty surrounding the company’s prospects. The Q2 results should quell much of that uncertainty and help its stock rise further.
Global Payments Inc. (GPN)
Fintech company Global Payments saw its stock rise by a solid 12% last week after, as you might expect, posting a better-than-expected Q2 beat. Notably, the company also managed to significantly reduce its operating expenses by 35% on a year-on-year basis and nearly 18% on a quarter-on-quarter basis.
But its latest earnings aren’t the only thing creating strong positive momentum behind this stock. Over the past week, analysts from major Wall Street banks have boosted price targets on GPN stocks, with others initiating coverage – also with bullish price targets.
With both these factors on its side, there’s a strong case to be made for GPN’s stock continuing to rise in the near term.
Atlassian Corporation (TEAM)
Australia-based Atlassian is the company behind collaboration software like Trello, Confluence, and Jira. Its shares saw a nice surge of nearly 14% last week after it reported strong earnings (fourth quarter for the company) that showed a 24% rise in revenue coupled with adjusted net income more than doubling compared to a year ago.
The company was highly positive on growth in the cloud space, which it notes is getting a nice headwind from the AI boom. As such, it expects a solid 25–30% rise in cloud revenue for the next fiscal year, coupled with strong margins.
An important thing to note is that despite its impressive share price performance, Atlassian’s stock is still trading far below its highs. Compared to a year ago, it’s still down nearly 30% – and compared to its 2021 peak, it’s down nearly 60%. This means that, with both its fundamentals and macro outlook improving, Atlassian’s stock could still have a long way to go.
To your wealth,
Felix @ Ace of Investing
