What Happened?
A number of stocks traded in opposite directions in the afternoon session after the Dow Jones Industrial Average retook the 50,000 level, driven by 'remarkably strong' corporate fundamentals and a breakthrough in U.S.-China relations.
President Trump and President Xi agreed in Beijing to ensure the Strait of Hormuz remains open, a critical win for global manufacturing supply chains choked by Middle East conflict. Also, April retail sales rose 0.5%, matching estimates and signaling that demand for industrial-produced goods remains stable.
Industrial companies build the machinery and infrastructure that power the global economy. While the 1.9% jump in import prices reported confirmed that manufacturing inputs were still more expensive, the reduction in geopolitical risk and the easing of the 10-year yield to 4.46% lowered the cost of the long-term debt used to finance these massive industrial projects.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Engineering and Design Services company Sterling (NASDAQ: STRL) jumped 3.3%. Is now the time to buy Sterling? Access our full analysis report here, it’s free.
- Commercial Building Products company Janus (NYSE: JBI) fell 0.1%. Is now the time to buy Janus? Access our full analysis report here, it’s free.
- Home Construction Materials company Griffon (NYSE: GFF) jumped 3.3%. Is now the time to buy Griffon? Access our full analysis report here, it’s free.
- Construction and Maintenance Services company Primoris (NYSE: PRIM) jumped 3.5%. Is now the time to buy Primoris? Access our full analysis report here, it’s free.
- Specialty Equipment Distributors company Richardson Electronics (NASDAQ: RELL) jumped 4.3%. Is now the time to buy Richardson Electronics? Access our full analysis report here, it’s free.
Zooming In On Richardson Electronics (RELL)
Richardson Electronics’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock gained 18.1% on the news that the company reported better-than-expected third-quarter financial results, beating analyst estimates for both revenue and earnings.
The company posted revenue of $54.61 million, comfortably ahead of the $51.51 million analysts had anticipated. Earnings were also a standout, with the firm reporting $0.13 per share, significantly surpassing the consensus estimate of $0.02 per share.
Management attributed the strong performance to "a more profitable sales mix, combined with our continued focus on controlling fixed costs," which drove a significant improvement in operating income that more than tripled from the prior year's third quarter.
Richardson Electronics is up 59.8% since the beginning of the year, and at $17.18 per share, has set a new 52-week high. Investors who bought $1,000 worth of Richardson Electronics’s shares 5 years ago would now be looking at an investment worth $2,355.
WHILE YOU’RE HERE: The Next Palantir? One satellite company captures images of every point on Earth. Every single day. The Pentagon wants it. Hedge funds are using it to beat earnings. You’ve probably never heard of it.
This is what the early days of Palantir looked like before it became a $437 billion giant. Same playbook. Different technology. If you missed Palantir, you need to see this. Claim The Stock Ticker for Free HERE.
