Investors are worried that S&P 500 stocks will let them down. So why not focus on the handful that are delivering perfection?
Eleven stocks in the stock market — including health care play NeoGenomics, language app creator Duolingo and chipmaker Nvidia — just turned in perfect fourth quarters and are getting noticed by investors, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence, MarketSmith and Bespoke Investment Research.
All 11 stocks are "triple plays," a term coined by Bespoke for companies that boosted their guidance for the future on top of beating earnings and revenue forecasts for the just-completed quarter.
But these triple plays are even more impressive still. All 11 stocks are up more than 40% just this year. That makes them standouts among standouts.
"We like triple plays as an indication that a company's business is firing on all cylinders, with above-expectations results and an improving outlook," Bespoke said. "A triple play is indicative of positive fundamental momentum instead of pure fundamentals."
Sizing Up The Triple Plays
Fourth-quarter earnings season wasn't a home run for most S&P 500 stocks.
Only 69% of S&P 500 companies reported a positive profit surprise for the quarter, which is below the five-year average of 77%, says FactSet's John Butters. Additionally, S&P 500 companies are beating bottom-line estimates by 1.3%, which misses the five-year average of 8.6%.
And that's why the triple plays are so noteworthy. All told, more than 100 stocks in Bespoke's universe of 2,000 major companies qualified as triple plays. And such companies are prized as the future is so uncertain for the S&P 500.
This past earnings season, triple plays saw their shares jump 5.6% on average on the day they reported results, Bespoke says. That tops the typical 4.8% reaction over the past 10 years.
Looking at some of the companies explains the enthusiasm.
Triple Play Homers
Medical testing company NeoGenomics is on fire. For one thing, shares are up more than 90% just this year. That's the largest jump among triple plays.
And it's easy to see why. On Feb. 23, the company reported a loss of just 6 cents a share, considerably less than the 16-cent loss analysts predicted. Meanwhile, the company posted nearly 7% higher-than-expected revenue of $138.7 million. Now analysts only think the company will lose 44 cents a share this year, down from the 53 cents they thought the company would lose a month ago.
Duolingo, the creator of an app that teaches you to speak other languages, also knocked it out of the park.
The company on Feb. 28 said it made an adjusted profit of 18 cents per share. Keep in mind that analysts thought the company was going to lose 3 cents a share. Meanwhile, revenue in the quarter hit nearly $104 million, topping views by nearly 4%. And now analysts think the company will make an adjusted $1.19 a share in 2023, much more than the 53-cent profit they called for a month ago. Shares are up 78% this year.
Nvidia: Scoring On AI In The S&P 500
Not all the triple plays are smaller companies. Nvidia, with $590 billion in market value, blasted past fourth-quarter estimates. Adjusted profit per share blew away forecasts by 10% on 1% higher quarterly revenue of $6.1 billion.
Given the tech company's huge opportunities with AI, analysts now think Nvidia will make $4.45 a share this fiscal year, up from the $4.34 a share they previously called for. Shares are up more than 60% this year.
It's a tough stock market for most companies. So why not look at the ones that can't seem to miss?
'Triple Play' Stocks Up The Most
| Company | Symbol | YTD change | Sector |
|---|---|---|---|
| NeoGenomics | 89.5% | Health Care | |
| Redfin | 85.6 | Real Estate | |
| Duolingo | 67.7 | Consumer Discretionary | |
| Nvidia | 63.5 | Information Technology | |
| Roku | 61.2 | Communication Services | |
| OneSpan | 59.1 | Information Technology | |
| Align Technology | 58.6 | Health Care | |
| Hims & Hers Health | 57.1 | Health Care | |
| Allegro MicroSystems | 51.2 | Information Technology | |
| Inter Parfums | 43.2 | Consumer Staples | |
| Shutterstock | 42.8 | Communication Services | |
| Procore Technologies | 40.0 | Information Technology |
Sources: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
