Why Sears Holdings, Triangle Petroleum, and SanDisk Are Today's 3 Best Stocks

The S&P 500 makes it a perfect four-for-four this week as Sears, Triangle Petroleum, and SanDisk lead all stocks to the upside.

Apr 17, 2014 at 5:15PM

The broad-based S&P 500 (SNPINDEX:^GSPC) finished a perfect week on the heels of better than expected earnings and solid economic data, pushing higher for a fourth consecutive session. (The market is closed tomorrow for Good Friday).

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On the economic data front, weekly initial jobless claims rose less than 1% to a seasonally adjusted 304,000. While investors would prefer to never see weekly initial jobless claims rise, the simple fact that they're traipsing along near a multiyear low -- and they came in well below economists' forecast for the week -- suggests an improving jobs market and the potential for the unemployment rate to head even lower.

Meanwhile, data released today by the U.S. Energy Information Administration showed that natural-gas storage increased by 24 billion cubic feet, a slower pace than economists had estimated. With natural gas already showing reserves at multiyear lows this news could further incite a rally in natural-gas drillers and midstream transporters and storage companies. On the flip side, higher natural-gas prices could threaten homeowners' pocketbooks if the weather doesn't cooperate.

By day's end the S&P 500 had advanced by 2.54 points (0.14%) to close at 1,864.85, erasing much of its previous two-day swoon last week.

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Leading to the upside today was struggling retail chain Sears Holdings (NASDAQ:SHLD), which jumped 14.1% after two news-driven events. First, board member Thomas Tisch disclosed in an SEC filing that he had purchased 475,000 shares of stock over the past two days. Board members often have a good feel for how a company is set to perform, so investors are viewing this purchase as a sign that better than expected earnings could be around the corner.

Also, an article by Forbes published earlier today made the case that retail giant Amazon.com (NASDAQ:AMZN) should purchase Sears. As Forbes contributor Robin Lewis noted, Sears and Kmart stores could serve as the distribution hubs and physical presence for Amazon, improving revenue and reducing costs through synergies. This idea seems far-fetched, and I'm still keeping my distance from Sears until I see a marked improvement in its top and bottom lines.

Small-cap oil and gas exploration and production company Triangle Petroleum (NYSEMKT:TPLM) gained 10.1% after reporting its fourth-quarter results following the closing bell last night. For the full year, Triangle delivered a 295% increase in production volume and a 326% increase in year-over-year revenue. Fourth-quarter revenue increased 158% while EBITDA jumped 166%. Triangle's earnings per share of $0.11 was $0.02 shy of what Wall Street expected, while revenue of $85.5 million met expectations. You might expect the company to be down after missing EPS estimates, but its 175% increase in proved reserves for the year, compounded with rising oil prices, could lead to big profits in the years ahead for Triangle.

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Finally, flash memory and data storage products maker SanDisk (NASDAQ:SNDK) surged 9.4% after reporting better than expected results in the first quarter. Overall, SanDisk delivered revenue of $1.51 billion, a 13% gain from the year-ago quarter, as profit per share hit $1.44. Wall Street was looking for just $1.49 billion in revenue and $1.25 in EPS, so this was a sizable beat. SanDisk attributed its strong growth to a 61% improvement in solid-state drive sales and much improved margins which hit 51.2% during the quarter. It's hard to be a bear following a report like this, but I would still contend that historically cyclical industries such as flash memory, which still comprises the bulk of SanDisk's revenue regardless of how fast its SSD segment is growing, are due for a downtrend sooner than later. Commoditized products such as those made by SanDisk make it very difficult to improve margins over the long run, which leaves me wary of today's closing of nearly $83 per share.

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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.

The Motley Fool owns shares of, and recommends Amazon.com. 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.

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