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Everyone is brilliant in a bull market. Or so the saying goes. An investor reveals his or her real skill in a bear market. Putting aside the debate over whether we’re headed into a bear market right now or are just seeing more of a short-term correction, it’s clearly been a challenging time.
The Dow Jones Industrial Average and the S&P 500 are both in negative territory for the year. While the Nasdaq Composite Index is still in positive territory, it’s seen lots of volatility and several Nasdaq stocks have plunged on just moderately disappointing earnings reports. Lululemon Athletica (NASDAQ: LULU) has lost almost 20% of its value over the past month on an earnings report that really wasn’t all that bad.
What’s an investor to do? One popular approach to investing in tough times involves seeking out the sectors that are countercyclical: Gold when the dollar is weak, or the lipstick maker at times when people can’t afford larger discretionary items.
But the reality is that it’s possible to find strong performing stocks across all sectors if you really look. Times like these serve to focus markets, which are punishing to signs of weakness, but also rewarding to signs of strength.
There’s certainly plenty of bad news circulating in today’s markets, but the good news is that the really strong players are standing out. It’s possible to find stocks that are going up in a down market.
Here are a few of them:
Chipotle Mexican Grill (NYSE: CMG)
What’s not to like about a restaurant chain that sells food that is affordable, healthy and tasty, and which also has plenty of room to expand? In its most recent quarter, Chipotle reported that net income increased by 27% while revenues grew more than 14%, underscoring that this is both a growth stock and a well-managed business.
At a time when other fast-food chains have come under pressure, Chipotle’s stock is up more than 7% year-to-date. That’s not outrageous growth, but it is solid growth from a stock that has gained more than 300% in the past five years. The stock’s ability to sustain and extend that growth in today’s tough market shows that this company has staying power.
JetBlue Airways (NASDAQ: JBLU)
Airplanes use a lot of jet fuel, which is why airline stocks often go up when fuel prices fall. But JetBlue is a standout, with a stock price that’s gained close to 70% year-to-date, adding to several years of strong growth that suggest it’s more than cheap oil that’s driving the momentum.
In an industry that’s notoriously challenging to make money, this not-yet-20-year-old carrier is expanding routes, building customer loyalty and enjoying rapid growth. Its operating income doubled in the second quarter.
Stamps.com (NASDAQ: STMP)
The name sounds like this company could be a failed dot-com leftover from 1999. But Stamps.com, which was founded in 1996, is flying high. If you’re looking for a business model that really merges the old economy with the new and offers a practical solution, Stamps.com delivers.
The company provides Internet postage solutions that recognize both that mail is critical to an Internet economy, but that there are better ways than waiting in the post office to send a package. Stamps.com has enjoyed steady growth in sales and income, and last month it raised its full-year sales and earnings guidance. The stock is up more than 66% this year.
Valero Energy (NYSE: VLO)
Oil prices are way down, but shares of this refining business are up more than 22% year-to-date, serving as a reminder that certain segments of the oil and gas industry can do well when oil prices fall.
Warren Buffett recently explained why he thought shares of Phillips 66 (NYSE: PSX) were a good investment. Rival Valero is also showing strong growth in earnings and refining volumes, and with a price-earnings ratio of around 6 its stock seems to be priced as a bargain.
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