Conn's and Home Depot Shine As Home Sales Come Back to Life

Myriad Genetics, despite new data backing up its gene-based prostate cancer test Prolaris, falls for a third straight day Thursday

May 22, 2014 at 7:12PM

The stock market woke up on the wrong side of the bed Thursday, selling off after last week's jobless claims data painted an unflattering picture of the economy. Just hours later, however, investors sent stocks back to breakeven territory, where the Dow Jones Industrial Average (DJINDICES:^DJI) managed to tread water for the remainder of the day. Home Depot (NYSE:HD) finished as the best blue chip performer today, while consumer goods retailer Conn's (NASDAQ:CONN) and molecular diagnostic company Myriad Genetics (NASDAQ:MYGN) ended as some of Wall Street's biggest movers. The Dow, for its part, tacked on 10 points, or 0.1%, to end at 16,543.

Home Depot added 0.9% Thursday as investors breathed a sigh of relief upon seeing existing home sales edge higher in April. It was only the second such increase in the last nine months, and existing home sales last month were still nearly 7% lower than they were in April of last year. Few companies in the world have more skin in the U.S. real estate game than the $107 billion Home Depot, so it's reassuring from an investor's standpoint to see transactions picking up again. Of course, Home Depot isn't the only company in the business of home improvement, and whether or not it has the upper hand on Lowe's is another question entirely.

Specialty retailer Conn's is a somewhat more indirect beneficiary of a robust real estate market, and its shares rocketed 5.7% higher today. Conn's, worth $1.6 billion by Wall Street's estimations, is a far cry from Home Depot's 12-digit market cap, making the stock much more volatile and risky than any of the Dow components -- something evidenced in the stock's precipitous 41% post-earnings plunge in February. But with great risk comes great potential for reward, and hedge fund icon David Einhorn even initiated a position in the company recently. Conn's is constantly tweaking its product mix to keep with the times, and recently got Tempur-Pedic Mattresses into all its locations; it might be worth taking a look at it if the real estate market keeps chugging along, so don't sleep on it!


Source: Myriad Genetics

Lastly, Myriad Genetics stock took a pounding on Wall Street today, slumping 4.8%. Sometimes -- and as you probably know from your own experience -- stocks can make big moves for little or no good reason. This was certainly the case with Myriad Genetics today, which has now lost more than 10% in three days, a sell-off seemingly triggered by what was actually good news. Myriad's Prolaris test, used to give the mortality risk for prostate cancer, now has data (as of Tuesday) showing that Prolaris was effective and able to do what it claimed. Despite this groundbreaking new medical technology, short interest in the stock has rarely been higher. At the end of April it would've taken shorts 25 days to cover their positions, an astronomical difference from the 3 days it would've taken them just a year ago.

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John Divine has no position in any stocks mentioned. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

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