Some surprising names stood out last quarter
07/06/17

Summer snooze is in full effect this week as traders hit the beach and light their grills. So, it’s a good time to review the second quarter and take stock of broader trends.

The S&P 500 rose 2.57 percent between March 31 and June 30, its seventh straight winning quarter. Let’s take a look below the surface at the real movers and shakers:

Whole Foods Market (NASDAQ: WFM) was the index’s top performer, leaping 42 percent after getting bought by Amazon.com (NASDAQ: AMZN) for just shy of $14 billion. As we’ll see below, other retailers weren’t so lucky. 

H&R Block (NYSE: HRB) surged 33 percent on strong earnings. While analysts hesitated to call a turnaround for the tax-preparation firm, some nudged price targets higher.1 It was tied for second-place with Nvidia (NASDAQ: NVDA), a high-flying chipmaker that momentum traders have loved for years.

Four of the index’s top 10 stocks in the quarter were medical-device makers. Align Technology (NASDAQ: ALGN), for example, rode a wave of dental enthusiasm 31 percent higher. Buyers also amassed cardiac-valve provider Edwards Lifesciences (NYSE: EW), renal- and urology- specialist C.R. Bard (NYSE: BCR), and instruments provider Mettler-Toledo (NYSE: MTD). Robotics firm Intuitive Surgical (NASDAQ: ISRG) came within a few decimal points of missing the top 10 as well.

Whole Foods (WFM), 3-month chart

Source: OptionsHouse by E*TRADE

PayPal (NASDAQ: PYPL) found itself in the winner’s circle with a 25 percent gain. Other electronic-payment firms outside the S&P 500 including Square (NASDAQ: SQ), First Data (FDC), and Green Dot (NYSE: GDOT) chalked up double-digit returns. Trend watchers may keep an eye on this group as the global exodus from cash continues. 

Speaking of trends, not all point higher. Just ask the energy sector, which contributed five of the index’s 10 weakest stocks in the period. Transocean (NYSE: RIG) fared worst, down 34 percent. Analysts blamed ongoing inventory gluts as upstart U.S. drillers flood global markets with oil.

Traditional retailers were the other big losers as the Internet turns shopping centers into ghost towns. Foot Locker (NYSE: FL) got stomped 34 percent on weak earnings, while Bed Bath & Beyond (NASDAQ: BBY) lost 23 percent of its value. Macy’s (NYSE: M) barely missed the bottom 10 as well.

Looking forward to the third quarter, buyers have already set their sights on banks after regulators signaled the sector has finally recovered from last decade’s financial crisis. There were also signs of money shifting away from high-multiple technology names and toward transportation over the course of June.

 

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1. Benzinga.com: Analyst Prefers To Let The Dust Settle From H&R Block's Q4 Beat. 6/14/17. Benzinga.com: HR Block Delivers Nice Q4 Beat, But Is The Bar Now Set Too High For 2018? 6/14/17.