Why Puma Biotechnology, Methode Electronics, and Conn's Are Today's 3 Best Stocks

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.

If we were in a Seinfeld episode, this would, without question, be the Bizarro episode in which good news is actually bad news and everything is in reverse.

The broad-based S&P 500 (SNPINDEX: ^GSPC  ) dipped for a fifth straight session after what can only be described as considerably better-than-expected economic data was reported this morning.

Initial weekly jobless claims fell 23,000 to a seasonally adjusted 298,000, which is nearly a six-year low and demonstrates that the jobs market is a lot stronger than economists had predicted. Similarly, the second estimate for U.S. gross domestic product came in at 3.6%, which was much stronger than the 2.8% that was initially forecast.

Under normal circumstances the market would be off to the races on these figures, which would portend solid growth prospects for the U.S. economy. However, stronger-than-expected growth also likely means the end to the Federal Reserve's monetary easing program, known as QE3, which has been largely credited with propping up the housing industry. Investors fear that once QE3 is fully removed, lending rates may move higher (part of the Fed's current monetary stimulus involves buying long-term U.S. Treasuries), which could negatively impact the housing industry and the loan aspects of the banking industry.

Weighed down by such concerns, the S&P 500 fell 7.78 points (-0.43%) to end the trading day at 1,785.03.

Bucking the trend and leading all stocks higher was Puma Biotechnology (NYSE: PBYI  ) which absolutely skyrocketed by 68.2% after announcing positive top-line data from its midstage neoadjuvant breast cancer study for neratinib. According to Puma's press release, the neratinib arm would be expected to deliver superior results to the control arm in treating HER2-positive/HR-negative signature breast cancer. Bayesian predictive models demonstrate a 94.7% probability of superiority over the current standard of treatment with this signature and a 78.1% probability of superiority over a control arm consisting of paclitaxel and Herceptin. Clearly, this data was much better than anyone had expected and lends hope that neratinib could one day become a blockbuster drug.

Giving Puma a run for its money to the upside is automotive and electromechanical device manufacturer Methode Electronics (NYSE: MEI  ) which soared a whopping 43.1% after reporting second-quarter earnings results. For the quarter, Methode delivered a 47% increase in sales to $190.9 million, while consolidated gross margin rose 450 basis points to 21.7% and adjusted earnings per share, excluding last year's one-time settlement, rose 292% to $0.51. A mixture of higher sales in its automotive, interconnect, and power products segment helped push revenue higher, as did lower costs and improved operating efficiency. Furthermore, Methode published its revenue growth projections (link opens pdf file) through 2017, which call for a compound annual growth rate of 16% that will lead to more than $925 million in sales by that year. With that type of growth, Methode's run may be well-deserved.

The story was similar for consumer products retailer Conn's (NASDAQ: CONN  ) which reported better-than-expected third-quarter results before the opening bell and saw shares rise 19.4%. For the quarter, Conn's reported a 51% increase in revenue to $310.9 million as net income doubled to $0.71 per share from $0.35 in the year-ago period. The $0.71 profit was $0.07 higher than Wall Street expected, while revenue topped estimates by a clean $22 million. Looking ahead, Conn's also pumped up investors by projecting full-year EPS of $3.80-$4, compared to the current consensus of $3.57, and is forecasting same-store sales growth next year of 7%-12%. I'm still personally amazed by Conn's incredible run and would certainly consider taking some profits after today's sizable pop.

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