It is starting to look like last week’s market meltdown was not the beginning of a broad-based collapse. Although fear of a U.S. recession, concern over the melt-up in AI-powered tech stocks and the unwinding of the yen carry trade all contributed to the market turmoil, stocks quickly rebounded and the S&P 500 closed out the week largely unchanged. Still, volatile, wild market swings often signal a market top.
Yet not every stock quaked when the market fell. Some companies showed remarkable resilience. Several outperforming stocks not only rose by double-digit rates when the market buckled but have gone on to post triple-digit gains.
The following three companies were the best outperforming stocks on the market over the past week. Let’s see whether they are worth buying now that the dust has settled a bit. Having zoomed when the market zagged, investors will want to know if they still have any gas left in the tank.
Latham Group (SWIM)
Swimming pool company Latham Group (NASDAQ:SWIM) initially dove alongside the rest of the market. SWIM stock tanked 10% early in the week before the company posted second-quarter results showing better-than-expected profits. The stock subsequently rallied to a 64% gain over the past week.
The largest in-ground swimming pool company reported a 10% drop in sales to $160 million but was able to improve profitability due to “improved cost structure and the impact of production efficiencies.” Talk of interest rate cuts could also benefit the bottom line and make pool installations easier to sell.
Latham also acquired automatic safety coverings maker Coverstar Central. Coverings have been declining for Latham with sales down 11% in the quarter.
Still, Wall Street expects sales to fall 8% for the full year to $520 million before rebounding in 2025. Analysts forecast a 7% increase in sales to $555 million. Profits are expected to plunge to 3 cents per share from 21 cents before bouncing higher to 11 cents per share the following year.
With a $4.53 per share price target, Latham Group already shot through analyst expectations last week. Trading at around $5.50 per share, there is now significant downside potential.
Lumen Technologies (LUMN)
Broadband and fiber optics network provider Lumen Technologies (NYSE:LUMN) also had earnings to thank for its stock lighting up the market last week. The stock rocketed 150% higher before giving up more than a third of the gains. But if the AI trade was part of what caused the market meltdown in the first place, it was what helped drive LUMN stock to new heights.
Having struggled with significant debt for years, Lumen Technologies seems to have a new purpose with artificial intelligence. It is providing a tailwind to its business due to the outside need for high-bandwidth infrastructure to support AI’s growth.
Lumen reported it has signed over $5 billion worth of partnership deals with major tech stocks related to AI. It sees the potential for over $7 billion with additional opportunities. It has partnered with Microsoft (NASDAQ:MSFT) to modernize its technology and save over $20 million in the next year. Lumen also secured from Corning (NYSE:GLW) 10% of the fiber optic cable maker’s capacity for each of the next two years, which will double Lumen’s fiber miles.
Even after the run-up in Lumen stock, shares still go for a tiny fraction of shares. It also shot past analyst price targets this week. Yet when they update their outlook, new targets could come closer to the high-side $7 per share estimate, a 40% gain from current levels.
TenX Keane Acquisition (TENK)
Last week’s biggest gainer was TenX Keane Acquisition (NASDAQ:TENK), a special purpose acquisition company (SPAC). It’s been a while since a SPAC has enjoyed such attention as TENK stock shot 275% higher.
On Aug. 2, shareholders approved TenX’s previously announced merger with Citius Pharmaceuticals (NASDAQ:CTXR). The deal is expected to close within the next few weeks, and the combined company will be renamed Citius Oncology with the ticker symbol CTOR.
Yet investors wanting to cash in on TenX Keane’s merger will have trouble doing so. The Nasdaq exchange halted trading on the stock as volume in its shares soared. According to TenX, the Nasdaq is looking for “additional information” (without saying about what), but apparently, the issue has not yet been resolved as shares are still not trading. Citius stock, however, is down 26% over the past week.
Still, Citius just received approval from the Food & Drug Administration for its Lymphir therapy for treating relapsed or refractory cutaneous T-cell lymphoma (CTCL). It is a $300 million to $400 million market opportunity.
Now that TenX and Citius have completed their merger, there may be substantial gains to make. The two analysts covering the stock have a price target of $4 per share. As it currently trades for about 70 cents per share, this implies a 470% upside.
On the date of publication, Rich Duprey did not hold (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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
