Today's 3 Best Stocks in the S&P 500

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

I know this might sound like a broken record by now, but it was yet again another day of mixed economic data amid a slew of generally positive earnings reports that helped push the somewhat indecisive S&P 500 (SNPINDEX: ^GSPC  ) to another new all-time record high.

In the plus column, the Case-Shiller Price Index of the nation's 20-largest cities exhibited year-on-year growth of 12.8%, which was higher than expected. Although pending home sales have fallen in four straight months, low housing inventory coupled with an improved level of housing industry investment purchases has helped buoy home prices better than many had expected.

On the other side of the coin, U.S retail sales not surprisingly fell in September, meeting expectations for a drop of 0.1% as consumers tended to holster their cash in anticipation of the government shutdown in October. In addition, the final consumer confidence figures for October were dismal, falling to 71.2 from 80.2 in September, and growing successively weaker with each reading during the month. Like retail sales, the anticipation of the government shutdown and debt ceiling debates had a lot to do with the weakening opinion of consumers in this latest report.

The other impressive aspect of the S&P 500's rise is that it came with the largest company by weighting in the index, Apple (NASDAQ: AAPL  ) , shedding close to 3% of its value after reporting rather ho-hum fourth-quarter results. Although Apple managed to sell 33.8 million iPhones during the quarter and has quite an extensive backlog of orders, this marked the third quarter in a row that profits fell from the previous year. Gross margin also dipped again by 3% to 37%.

By day's end, the S&P 500 had gained 9.84 points (0.56%) to close at 1,771.95, the iconic index's 12th gain in the past 14 sessions.

You can certainly tell it's earnings season because topping the charts today was water and wastewater application technology provider Xylem (NYSE: XYL  ) , which gained 12.4% after its third-quarter earnings report handily topped expectations. Xylem is typically not a company we're used to seeing among the day's top performers. For the quarter, Xylem reported a 4% increase to $965 million as its adjusted profit per share improved to $0.49. These results handily topped the $0.35 in EPS and $918.7 million in sales that the Street expected. Furthermore, Xylem boosted its full-year forecast and is now calling for $3.8 billion in sales and $1.60-$1.65 in EPS relative to the current consensus of $1.42 in EPS and $3.73 billion in revenue.

The story was the same for hardware and software developer for the logistics industry Pitney Bowes (NYSE: PBI  ) , which advanced 8% after also reporting market-topping third-quarter results. Pitney Bowes reported yet another year-over-year revenue decline of 1.1% to $939 million but kept its costs under control, which allowed it to report an adjusted profit of $0.49, $0.08 better than expectations. For the full year, the company also forecast EPS in a range of $1.68-$1.83 which basically matches the consensus on Wall Street of $1.72. With heavy short interest built into this stock, any bit of good news around earnings time is enough to send Pitney Bowes screaming higher. As for me, I still suggest the stock is off limits until it figures out a way to reverse its multi-year revenue decline.

Finally, global steel producer U.S. Steel (NYSE: X  ) jumped 8.8% after it, too, crushed profit expectations but fell well short of revenue projections. For the third quarter, U.S. Steel reported an 11% revenue decline to $4.13 billion, about $200 million below expectations, but delivered a one-time cost-excluded loss of just $0.14 per share which was $0.31 narrower than forecast. Before you get too excited, keep in mind that U.S. Steel also notes that its operating results will be worse in the fourth quarter than in the third because of planned maintenance. Like Pitney Bowes, U.S. Steel has huge levels of short interest so today's reaction could be nothing more than a short squeeze. While I would argue that the worst is behind U.S. Steel, I still don't feel it deserves its current valuation which values the company at a lofty 30 times next year's earnings.

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