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These 2 Unlikely Winners Are Up 20%-Plus on a Gloomy Stock Market Day

The stock market has been on edge throughout September, and Tuesday started off with the same kind of volatility we've seen all month long. Stocks initially moved higher in an attempt to rebound from Monday's sizable decline.

However, markets quickly gave up most of those gains. By just before 11 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI) was down 48 points to 27,099. The S&P 500 (SNPINDEX: ^GSPC) managed a small gain of four points to 3,285, however, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) picked up 24 points to 10,803.

Yet even as the broader stock market struggled to find direction, a couple of stocks showed no hesitation in shooting upward. GameStop (NYSE: GME) has been under pressure for a long time, but a new idea brought investors hope that the worst might be over for the video game retailer. Meanwhile, Carvana (NYSE: CVNA) announced its latest financial results, and shareholders liked what the innovative car retailer had to say.

Stock chart with green line going up.

Image source: Getty Images.

Playing to win

GameStop stock jumped 21% Tuesday morning. The move came amid news that an activist investor is interested in the video game retailer and has an ambitious plan for making GameStop's business relevant again.

Earlier this month, Chewy founder and former CEO Ryan Cohen made a sizable investment in GameStop through his RC Ventures hedge fund. The move sparked speculation that Cohen might choose to take a more active role in figuring out a recovery strategy for GameStop.

The latest filing from RC Ventures with the U.S. Securities and Exchange Commission told GameStop shareholders everything they wanted to hear. By filing on a 13D form, Cohen indicated his desire not merely to be a passive investor, but also to seek greater control or suggest changes in company strategy.

Cohen apparently wants to make GameStop compete against major e-commerce companies like Amazon.com, according to reports. Trying to broaden product lines beyond video games is similar to what some other retailers have tried to do without success. Yet Cohen's experience with Chewy gives him credibility, and that has GameStop investors excited for the first time in a long while.

Driving higher

Meanwhile, shares of Carvana were higher by 27%. The online auto retailer gave preliminary results for the third quarter, and they included a lot of extraordinary numbers pointing to Carvana's ongoing growth.

Carvana told investors that they should expect record results in several areas in the third quarter. The car seller believes it will post new highs in retail units sold and total dollar revenue, as well as gross profit per unit and adjusted pre-tax operating profit margin. Carvana also expects that it will come close to breaking even in terms of adjusted pre-tax operating income.

Carvana CEO Ernie Garcia was excited about the results. "The momentum that we saw in the second quarter accelerated into the third," Garcia said, "leading to record performance for Carvana in metrics that demonstrate strong progress both in growth and toward profitability." The CEO believes there's plenty of room for more record results to come.

Carvana had seen its stock price sink substantially in the stock market correction this month. But with the good news, shares are now looking at potentially reaching record heights of their own, once again.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Chewy, Inc. and GameStop and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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