October started off as a pretty weak month for stocks.
Securities sold off thanks to the impact of a government shutdown
and a possible government debt default. Fortunately, republicans
and democrats came together enough to find a short-term compromise.
This, along with a pretty solid earnings season, was enough to lift
the broad markets throughout October. In fact, the S&P 500
finished the period up about 4% for the time frame, pushing the YTD
gain for the key benchmark above the 20% level.
Yet while the S&P 500 did pretty well in the month, a few
stocks blew the doors off of this four percent gain. In fact, there
were a handful of decent sized companies (market cap above $500
million) that gained more than 50% in the month.
Below, we highlight three such companies, any of which could be
worth a closer look by momentum investors, or those looking for
companies that may have overextended themselves as of late:
Solar City (
The trend in the solar power industry has been pretty solid lately,
with a number of companies surging. Consumers appear to be
embracing the product in droves, while a rebound in foreign markets
is also helping sentiment.
Solar City focuses on rooftop solar installations, using a leasing
approach. This means that customers generally pay little to nothing
up front, and
instead pay SolarCity lease payments
. This provides SCTY with a solid revenue stream, and if recent
growth is any guide, users seem to like this approach too.
Though the company is expected to lose money both this quarter and
this year, estimates have been moving higher as of late, while the
year-over-year growth currently stands at 67% for the current year.
And with a solid beat from First Solar in their latest report,
there is plenty of hope that SCTY can be another company to deliver
in this earnings season.
However, investors should note that SCTY has already had quite the
run, as the stock has appreciated by 55.2% in October alone. The
stock does carry a Zacks Rank #3 (Hold), though the solar industry
is in the top 25% so more gains may be possible.
AMR Corp (
AMR Corp, the parent for American Airlines, has had an interesting
run lately. The company has had to fight through significant
turbulence as its planned merger with US Airways-to create the
world's largest airline-was rejected by the Department of Justice.
Now there is some hope that the company can reach a settlement and
combine, hopefully producing efficiencies for the airline.
Speculation of this happening has helped to boost the price of
AAMRQ significantly as of late, and within striking distance of its
Our consensus estimate has also moved higher lately, going from
$2.20/share to $2.40/share in just the past two months. And for the
current quarter, growth is expected to be quite strong
year-over-year as well, helping to keep this stock at a Zacks Rank
#1 (Strong Buy).
Still, AAMRQ shares have taken off lately, adding more than 60% in
just October, suggesting that many traders and investors believe
that the deal will go through. It is also worth noting that
airlines have a pretty strong industry rank, so there is definitely
reason to still be bullish, particularly if oil prices continue to
Education Management Corp (
EDMC ended October on a pretty weak note, falling by over 7% on
Halloween. It doesn't really matter too much for longer term
investors though, as EDMC has surged by over 74% in the month.
This stock, which is in the for-profit education industry, was
boosted by some of the recent positive news in the space.
Recent asset sales by Career Education
boosted prospects across the sector, while many education names
were already beaten down, so part of the surge has to be some
bottom-fishing as well.
The stock currently has a Zacks Rank #2, but it did guide below the
consensus. It did keep the
2014 EPS guidance in-line
, but the best might be over for EDMC for now, especially if the
estimate trend starts to go lower.
Even with the market volatility at the beginning of the month,
stocks did pretty well in October. And with a solid earnings season
and a lack of negative catalysts on the horizon, we could see a
decent end to the year too.
Just note that even with this decent performance, several stocks
thoroughly crushed the market during the time frame. These stocks
added more than 50% in the month, and were the real winners of the
solid trading in October.
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