The stock market plummeted last week on fears of a recession. The S&P 500 tumbled more than 3% as investors fled former high-flying stocks. While the benchmark index did claw back all the losses to essentially breakeven by the end of the week, such wild swings could be a sign of a new, more sustained collapse.
The best S&P 500 stocks during the recent market turmoil were not the same ones that brought the index to its all-time highs. Nvidia (NASDAQ:NVDA) is still down 2.5% from last week, Microsoft (NASDAQ:MSFT) is flat and Alphabet (NASDAQ:GOOG, GOOGL) is off nearly 2%.
Instead, there were three companies that barely flinched at the tumult and then went on to score steep gains. If the market is getting ready to fall again, is now the time to buy the best S&P 500 stocks since the selloff?
Let’s dive in to see why these three stocks should be on your radar.
Kellanova (K)
Snacks maker Kellanova (NYSE:K) couldn’t have cared less about the stock market’s drop. When everyone else was losing their mind, the owner of Pringles, Pop-Tarts and Eggo waffles was rocketing 16% higher that day.
While Kellanova reported better than expected earnings the week prior, showing better than expected top and bottom line numbers, it was news of a potential buyout that sent shares soaring. Privately held candy maker Mars was rumored to be considering acquiring Kellanova. The snacks market is quickly becoming a hotbed of mergers-and-acquisition activity.
Mondelez International (NASDAQ:MDLZ) bought Clif Bar for $2.9 billion, Hormel Foods (NYSE:HRL) bought peanut stock Planters for $3.4 billion, J&J Snack Foods (NASDAQ:JJSF) bought Dippin’ Dots for $222 million, Campbell Soup (NYSE:CPB) bought Rao’s pasta sauce maker Sovos Brands for $2.3 billion and J.M. Smucker (NYSE:SJM) acquired Hostess Brands for $5.6 billion.
That’s a lot of deals in the space. And let’s not forget that Kellanova itself spun off its cereal business into WK Kellogg (NYSE:KLG) so it could focus on snacks.
It is important to remember there is no deal for Kellanova announced. It is rumor based on unnamed sources, according to Reuters. But with Kellanova having a $27 billion market valuation prior to the potential deal being disclosed, it would make an acquisition one of the biggest in the industry.
Kellanova reported strong organic growth and raised its outlook for the year. With snacks a fast-growing market, Kellanova would make a good stock to own regardless. K stock is up almost 19% since the market selloff.
Fortinet (FTNT)
Cybersecurity outfit Fortinet (NASDAQ:FTNT) hesitated on the market selloff. Shares dipped 2% on the news but then it reported second-quarter earnings on August 6 and was off to the races. Shares soared 15% on the beat-and-raise results and closed out the week 23% higher.
Much of its business is centered around hardware-based firewalls monitoring traffic for physical data centers. Because its solutions offered intrusion prevention systems, endpoint security and secure access service edge (SASE) offerings, billing volumes are soaring.
Revenue jumped 11% year-over-year leading to record GAAP and adjusted operating margins north of 30% and 35%, respectively. FTNT stock is up 19% year-to-date and has climbed 58% from its 52-week low. It doesn’t hurt either that industry leader Crowdstrike Holdings (NASDAQ:CRWD) suffered a major snafu that should bolster sales for its rivals.
Wall Street forecasts revenue will grow 10% this year to almost $5.9 billion and then grow another 12% in 2025 hitting $6.6 billion. Earnings over the next two years are expected to do even better. Analysts estimate $2.21 in earnings in 2025, a 36% jump from last year’s figure.
Fortinet continues to be one of the best S&P stocks to buy.
Axon Enterprise (AXON)
Stun gun maker Axon Enterprise (NASDAQ:AXON) is another stock that shrugged off the market selloff. Its shares dipped 2% last Monday but it also reported earnings that wiped all vestiges of doubt from investors’ minds. Shares rocketed 25% higher the next day as revenue raced 35% higher in the second quarter. It allowed the maker of less-than-lethal weapons, cameras and evidence database management software to raise its outlook for the year.
Demand for Axon’s Taser energy weapons, commonly referred to as stun guns, continue to grow. Sales were up 27% in the period to $196 million with gross margins exceeding 60%. Its body cameras also saw significant uptake by law enforcement with the sensors segment revenue jumping 28% year-over-year. Axon noted its newest model, the Axon Body 4, was the model that saw the fastest adoption. It has already sold over 200,000 units.
In an era of accountability that seeks protection of both law enforcement officers and the public, less-than-lethal weapons and body cam usage is exploding. Analysts forecast sales will jump 29% for the full-year to $2 billion with profits rising 15% to $4.78 per share. Axon Enterprise is still one of the best S&P 500 stocks to buy.
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) and positions in the securities mentioned in this article.
