Why Cypress Semiconductor, F5 Networks, and Netflix, Inc. Are Today's 3 Best Stocks

Despite a lousy day on the S&P 500, Netflix's stock blows away the markets with subscriber growth that fuels a double-digit stock jump.

Jan 23, 2014 at 5:15PM

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.

The S&P 500 (SNPINDEX:^GSPC) gave investors its best shot at bouncing back in the closing hour of today's market, but it's tough to come back from the kind of losses stocks were running into earlier today. While the S&P 500 ended the day down around 0.9%, that was a markedly better number than earlier losses weighing the index down around midday. Stocks across nearly every sector plummeted into the red and the market's fear index, the CBOE Volatility Index (VOLATILITYINDICES:^VIX), or VIX, jumped by more than 8%.

What spooked investors so badly? Manufacturing on both sides of the Pacific Ocean hit the skids today, with Markit's purchasing managers index for January showing U.S. manufacturing declining to a reading of 53.7 from December's mark of 55. New orders and output both fell in Markit's analysis, but considering that a reading of 50 indicates neither expansion nor contraction, American manufacturing's still growing solidly, if slowing somewhat.

That can't be said for Chinese manufacturing, as HSBC and Markit's flash PMI for China fell by nearly a percentage point from December's mark and dipped into contraction territory. Some economists did point out that Chinese economic figures often fluctuate around the Chinese New Year that's rapidly approaching, but the shock of the reading nonetheless sent Asian markets down and reverberated around U.S. stocks, outweighing strong manufacturing data from Europe.

Still, with earnings season on tap, there's always a chance for companies' great performances to outweigh broader market issues -- and that's exactly what happened today with the S&P 500's top three stocks.

Semiconductor maker Cypress Semiconductor (NASDAQ:CY) jumped 6% today despite quarterly results that showed revenue falling 7%. Still, total fourth-quarter sales of $168 million just managed to top analyst expectations, and the company's operating margins more than doubled. With distributors reducing inventories, Cypress expects demand to pick up, and the company foresees revenue gaining through the majority of 2014 -- a prediction that investors clearly were happy to hear.

Network application technology firm F5 Networks (NASDAQ:FFIV) also hit an earnings-related bounce today, with the stock jumping by more than 5% after the company released its quarterly report following the closing bell yesterday. F5's earnings adjusted for one-time items climbed to beat expectations, while revenue jumped 11% for the quarter from a year ago. Yet it was F5's rosy outlook going forward that impressed investors the most: The company announced that it sees earnings for the current quarter coming in at between $1.23 and $1.26 per share, topping the $1.21 average analyst estimate.

Yet neither F5 nor Union Pacific had as good a day as S&P 500 leader Netflix (NASDAQ:NFLX). Netflix's stock blew away the market's lousy day with a nearly 16% jump after the company reported stellar quarterly earnings. Netflix's revenue advanced by 24% from a year ago, but the real victory for investors was Netflix's explosive subscriber growth. More than 2.3 million subscribers in the U.S. alone joined Netflix's ranks in the fourth quarter, with another 1.7 million international subscribers pushing the company's overseas subscription base over the 10 million mark. With Netflix projecting another 2.25 million new U.S. subscribers and 1.6 million international subscribers in the first quarter, this stock's poised to continue to soar behind the roaring rocket of member growth.

How you can find the next Netflix
Netflix has been a huge victory for savvy investors as of late, but opportunities to get wealthy from a single investment don't come around often. However, they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.

Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Cypress Semiconductor and Netflix. It owns shares of F5 Networks and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information

Compare Brokers