Surprises to the upside during third-quarter earnings season were many. This has led to a reversal of fortune for many stocks. Those companies had taken a beating during the 2022 bear market. Well-known companies that had been abandoned by investors look shiny and new after issuing strong financial results and rosy forward guidance.
This positive market development enables the rally to broaden beyond typical names associated with artificial intelligence (AI) or weight loss drugs.
Let’s peer into three ultimate comeback stocks to watch now following their strong Q3 prints.
Starbucks (SBUX)
Shares of Starbucks (NASDAQ:SBUX) rose 10% and broke above $100 a per share. It reported better-than-expected Q3 results.
The Seattle-based company reported earnings per share (EPS) of $1.06 versus 97 cents of Wall Street forecasts. Revenue rose 11% year over year (YOY), at $9.37 billion compared to anticipated $9.29 billion. The company’s same-store sales rose 8%, driven by higher prices and a 3% increase in customer traffic at its retail outlets.
Starbucks Q3 sales were given a boost by the launch in August of its popular fall menu that includes its bestselling pumpkin spiced latte. Outside of North America, Starbucks’ same-store sales rose 5%, driven by more customer visits. Of particular importance was China, which is Starbucks’ second-largest market. During Q3, same-store sales across China rose 5% much better than prior year. At that time, same-store sales in China plummeted 16% as their government’s zero Covid-19 crackdown led to many Starbucks locations being shuttered.
After reaching a 52-week high on May 1 of this year, SBUX stock had fallen 21% up until its Q3 print. Now the shares appear to be making a strong comeback.
Palantir (PLTR)
Data analytics company Palantir (NYSE:PLTR) is a technology concern that has flown under the radar a bit this year.
Many investors seemed to write off the company after its stock plunged 83% between January 2021 and December 2022. However, PLTR stock has been on the comeback trail throughout this year. Its stock just got a big boost after PLTR announced Q3 earnings that beat Wall Street forecasts and raised its full-year revenue guidance. Palantir’s share price is up 20% immediately following the print, bringing its year-to-date (YTD) gain to 173%.
Palantir reported Q3 EPS of 7 cents, better than the 6 cents expected by analysts. Revenue increased 17% YOY to $558 million in Q3 versus anticipated $556 million. In addition, overall results were helped by Palantir’s commercial revenue growing 33% YOY in the quarter. While most PLTR work continues to be with U.S. government agencies, Palantir has successfully grown its private sector business unit. Looking ahead, the company raised its full-year revenue guidance. That number is expected to fall between $2.216 billion and $2.22 billion, up from $2.212 billion previously.
Further, Palantir’s integration of artificial intelligence (AI) into its data analytics products appears to be icing on the cake for investors. Those traders continue to bid up PLTR stock.
Shopify (SHOP)
Another beaten down tech name that is riding high in the saddle once again is Shopify (NYSE:SHOP).
Shares of the Canadian e-commerce firm popped 22% after it issued Q3 financial results. Indeed, that crushed Wall Street forecasts and raised its guidance for the remainder of 2023.
Shopify reported EPS of 24 cents versus expected 14 cents. Revenue amounted to $1.71 billion compared to $1.67 billion that analysts had forecasted. The volume of merchandise sold on Shopify’s e-commerce platform increased 22% to $56.2 billion during Q3. Experts had estimated merchandise sales of $54.2 billion.
In terms of guidance, Shopify expects full-year 2023 revenue to grow at 25% or better. The beat and raise performance comes after Shopify tightly controlled costs. Earlier this year, the company laid off 20% of its workforce and sold Deliverr. That service was the last-mile delivery company that Shopify acquired for $2.1 billion in 2022. During Q3, Shopify announced a new partnership with Amazon that allows its merchants free Prime delivery when selling on Amazon’s online storefronts.
With the Q3 earnings bounce, SHOP stock is now up 65% in 2023. It’s a major comeback for the company after its share price fell 85% between November 2021 and the end of 2022.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
