Top 5 Best-Performing Stocks Amid Global Uncertainty: Adobe, Broadcom, Fastenal, Lululemon, Nasdaq

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Top 5 Best-Performing Stocks Amid Global Uncertainty: Adobe, Broadcom, Fastenal, Lululemon, Nasdaq

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Adobe, Inc. (NASDAQ) ADBE Loading USD The stock is literally soaring, with share prices ranging between $505-522 in early October to a 20-month peak at nearly $575 on October 12. The stock closed previous week at $548.8. It has already climbed to the area above $560 once again after that. This means, gains have reached nearly 12% within just a few trading sessions. The market valuation rose from 7% to 9%, which is also a solid growth, compared to a short-lived discount in September when the broad market faced correction. As "adobe" is actually the Spanish name for mud brick, a famous firm with the same name just catching the AI-epoch hyping moment to provide an increasingly creative, productive and personalized building material for designers. It continues to improve its popular software for content generation, including graphics, photography, illustration and animation. The California-based company convincingly responded to the challenge from new technology startups like Midjourney and Stable Diffusion, which threaten Adobe's usual customer base of creative professionals who use its tools like Photoshop. The new generation of tools Adobe announced this month included a feature called "Generative Match". It not only allows users to generate an image from a few words of text, but also has an ability to make a lot of content versions from 10 to 20 uploaded images or a character. Its tools are helping big brands use generative artificial intelligence (AI) technology to automatically transform their initial graphic idea into thousands of images for various needs like websites, social media campaigns and print advertisements. Adobe CEOs promised that prices would not change from the increases previously disclosed in September, which is also important from a purely commercial point of view.

Broadcom, Inc. (NASDAQ) AVGO Loading USD Another Californian company, Broadcom, is a global supplier of semiconductor and infrastructure software products. Its market cap exceeded $350 billion, and the stock freshly jumped from about $820 on October 6 to $925 at its peaking price of October 13. The price growth reached 12.8% at that particular moment, and it still counted 7.7% as to last week's closing price. The management of Google reportedly discussed the options of allegedly refusing to purchase tensor processors from Broadcom starting 2027, according to "informed sources", which led to a correction of Broadcom shares around September 21. Yet, that downside move was very short. Broadcom announced at the beginning of summer 2023 that its business expects to receive up to a quarter of all its revenue in the AI segment in 2024. "Our revenue today, from this opportunity, represents about 15% of our semiconductor business," Chief Executive Hock Tan revealed, adding that it was only 10% in the fiscal 2022. He also forecasted Q3 sales above estimates on AI chips agiotage demand. It still helps tremendously in boosting the company's capitalization. The viral success of ChatGPT led to massive corporate investments in AI-related technologies. Broadcom supplies chips, which are useful for data centres and specialized chips to speed up AI processing. As early as in April, it released a chip for wiring together supercomputers for AI processing, based on networking. Broadcom reported its Q2 earnings on August 31. The numbers were solid. At the same time, it broadcasted Q4 revenue, which may be slightly below Wall Street estimates on possible broader demand weakness, citing the entire software industry may feel pain of slashed IT budgets across enterprises, both in the U.S. and Europe. Yet, further developments were more favourable, and the next Q3 quarterly results are scheduled only on December 7. So, it is seemingly more than enough time for the asset price could reflect at least some additional part of this company's great potential.

Fastenal Company (NASDAQ) FAST Loading USD Fastenal was upgraded by several investment houses following its above consensus Q3 earnings on October 12. Its excellent and accelerating results, covering 4% daily sales growth and a similar pace of earnings per share (EPS) increase YoY were additionally supported by upbeating Q3 2023 conference call. Total sales in Q3 2023 increased by 2.4%. The global distributor of industrial and construction supplies was originally focused on North and Central America, but continued its expansion. It offers wholesale lots of threaded fasteners, bolts, nuts, screws, studs, washers etc, which are used in manufactured products and construction projects, as well as in the maintenance and repair of machines. Its successful business model maintained an operating margin as high as 21%. Fastenal's manufacturing rose 6.4%, even despite a rather sluggish demand and a cautious outlook for spending worldwide, when fasteners saw a decline of 2%, while non-fastener products remained healthy. The company also reduced its debt burden to 7% of total capital. Accounts receivable were up 5.4%, while inventories fell 9.8%, as Fastenal is implementing measures to improve efficiency in inventory management. Its net capital spending range has been reduced. Fastenal said it is committed to projects previously delayed due to supply chain challenges, with completion expected in 2024. It also anticipates a deficit in the price-cost ratio, similar to the previous year. Fastenal's government business is gaining momentum. Its CEOs highlighted corporate success in expanding Onsite bases and the company's digital footprint, as it plans to sign approximately 350 Onsites achieving a 60% digital engagement rate by the end of 2023. Fastenal clearly follows the latest trends, which helped it to add nearly 25% to its market value since the beginning of the calendar year, including a 7% spike after its latest Q3 report.

Lululemon Athletica Inc. (NASDAQ) LULU Loading USD This week shares of Lululemon Athletica soared by more than 10% to their highest level since the Christmas season of 2021. The rise came formally on the news of the addition of the Canadian sports apparel and shoes maker into the Wall Street benchmark S&P 500 index since October 18, instead of Activision Blizzard. This update was destined when Microsoft was regulatory allowed to complete its blockbuster $69 billion deal to acquire the popular video game company. Therefore, mutual fund managers, as well as many other institutional investors, who used to track the Wall Street indexes, will automatically add the "new" stock to their index-copying portfolios. Meanwhile, Lululemon systematically increased its market cap in 2023. Its share price grew by 17% even before the S&P 500 joining news, from $320 to $377. A fresh price peak was at nearly $420, while the median price target among the 32 analysts covering Lululemon's stock is $450, according to LSEG data. It is actually trading at about 28 times its next 12-month's earnings, compared to its 5-year historical average of about 40 times. There is still some space for imagination at least. The mentioned analyst pool's current recommendation is also a "buy". Lululemon itself lifted its annual profit and sales forecast this August, citing an improvement in its North American business.

Nasdaq OMX Group, Inc. (NASDAQ) NDAQ Loading USD Nasdaq stock exchange business added nearly 6.5% to its own market caps on October 18 following its Q3 financial results released on that day. Its profit was successfully kept at the same level of $294 million as in Q3 2022. Its earnings per share (EPS) was slightly higher at $0.60, while adjusted earnings reached $0.71 cents per share vs $0.69 cents in consensus forecasts. After increased transaction expenses were excluded, Nasdaq revenue climbed to $940 million from $890 million a year ago, which also slightly beat analysts' projections. At the same time, the total revenue number lowered to $1.45 billion from $1.56 billion. Nasdaq's solutions businesses were shining, as it saw a 9% surplus in revenue to $694 million while pure trading services revenue decreased by approximately 1% to $236 million. The company also said it had a 3% increase of operating expenses due to increased employee costs and other overheads. Despite the latest surge in its stock price, Nasdaq group shares are still within the bearish trend since December 2022, losing nearly 23% of its market caps, if compared to its 10-month old highs. Thus, further investment attractiveness of Nasdaq group business is still very questionable. If so, its October take-off still needs more confirmations from the technical side.

Chart from 19.10.2023

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说明

Large funds and a roaring crowd of small to medium private investors are trying their best to regain self-control in developing the concept that a wider but still rather narrow list of Wall Street stocks would play the role of a quasi-defensive pool of assets. Despite persistent inflation, monetary and geopolitical headwinds, at least a couple of dozen firms may apply for trading better than the market, from time to time. All of them are related to high potential businesses. Besides the iconic Magnificent Seven of tech giants like Apple, Amazon, Google, Meta, Microsoft, NVIDIA and Tesla, the price performance in the first half of October described the range of companies, which may be added to a short list. Among those recent favourites, one could pay attention to the following stocks.

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