Why iGATE, Cash America International, and Rite Aid Are Today's 3 Best Stocks

Despite solid economic data, the S&P 500 gets pummeled. Thankfully for investors, these three stocks bucked the trend in a big way.

Apr 10, 2014 at 5:15PM

It was an ugly day on Wall Street for bulls, with the broad-based S&P 500 (SNPINDEX:^GSPC) shedding more than 2% despite market-topping economic data.


On the data front, weekly initial jobless claims fell 32,000 to a seasonally adjusted 300,000, which was also their lowest level in seven years. This is great news for the jobs market as it could signify that fewer people are having trouble finding work, which may lead to ongoing improvement in the U.S. economy.

Also in the positive column was the narrower $36.9 billion Treasury deficit in March compared to the $106.5 billion deficit reported in February. The Obama administration and Congress are trying to work together to reduce the federal budget, and months like we had in March show that the deficit is starting to be addressed.

This data, however, was no match for profit takers and short-sellers, who pummeled the high-flying biotechnology and technology sectors once again, and piled onto a select group of companies reporting earnings that didn't meet expectations.

By day's end, the S&P 500 had tumbled 39.10 points (-2.09%) to close at 1,833.08. This marks the lowest close for the S&P 500 in nearly two months. Despite the tumble, three companies still managed to buck the trend in a big way.

Leading the charge was Information-technology and IT-outsourcing solutions provider iGATE (NASDAQ:IGTE), which soared 16.4% after the company announced impressive growth in the first quarter. Per its press release this morning, iGATE delivered a 10% increase in revenue, to $302.2 million, as adjusted EBITDA increased 15% due to the addition of nine new customers. Net income of $31.6 million, however, was down from the $34.8 million reported in the year-ago quarter. Still, its EPS of $0.45 topped Wall Street's expectations by $0.04, while revenue beat by $1.3 million. With a revenue growth rate in the high single digits and a forward P/E of 15, it's conceivable that shares could still have room to run higher.

Payday-loan and check-cashing provider Cash America International (NYSE:CSH) gained 12.3% on the day after updating its first-quarter earnings guidance and announcing that it was reviewing strategic alternatives for its online business, Enova International, which could involve a tax-free spin-off of the company. Anytime you say the word "spin-off," investors get excited these days, as spin-offs have a way of unlocking shareholder value by making a company's revenue and profit potential appear more transparent. In addition, Cash America upped its EPS forecast to $1.50-$1.55 in the first quarter as compared to the $1.25 it had initially projected. The company attributed smaller loan losses and improved operating efficiencies as the reason for the beat. Given its numerous catalysts and single-digit P/E, I could potentially see this stock heading even higher.


Lastly, drugstore chain Rite Aid (NYSE:RAD) tacked on 8.4% after reporting results from the fourth quarter. In total, Rite Aid earned $0.06 per share for the quarter on revenue of $6.6 billion, topping Wall Street EPS estimates by $0.02, and surpassing sales expectations by $90 million. As has been the case in recent quarters, competition in front-end sales has been heating up between it and its rivals causing front-end same-store sales to slump 0.7% in the first quarter. What's notable, though, is that pharmacy same-store sales vaulted higher by 3.5% despite a 1.8% decrease in prescriptions being filled (mostly due to reduced flu shots administered). Looking ahead, Rite Aid anticipates full-year EPS of $0.31-$0.42 on $26 billion-$26.5 billion in revenue, which is in-line to slightly ahead of the $0.36 in EPS on $25.8 billion in sales the Street was expecting. I have to admit that I've been wrong about the comeback in Rite Aid thus far, but I'm still not convinced that it offers better upside potential than any of its competitors.

iGATE, Cash America, and Rite Aid may have bucked the trend higher today, but they'll likely have a hard time keeping pace with this top stock in 2014
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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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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.

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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.

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