Why International Game Technology, Family Dollar, and Newfield Exploration Soared Last Week

The S&P 500 (SNPINDEX: ^GSPC  ) broke its weekly winning streak, falling 13 points or about two-thirds of a percent on the week. Worries about global economic growth continued to weigh on the market, and worsening conditions in Iraq made many investors think that the Middle East could become the unexpected catalyst that might bring on a long-awaited correction for the stock market. Yet regardless of the downward pressure on the S&P 500 broadly, shares of International Game Technology (NYSE: IGT  ) , Family Dollar (NYSE: FDO  ) , and Newfield Exploration (NYSE: NFX  ) all made impressive gains on the week.

International Game Technology soared 27% on the week, as investors applauded the slot-machine maker's moves to put itself up for sale. Early in the week, just the positive step of getting investment-banking advisors in its corner was enough to send International Game Technology's stock sharply higher. But surprisingly, the company moved extremely quickly to gather interest from potential buyers, with an auction-bidding process revealing a number of parties willing to consider a merger seriously. It now looks as though a possible deal could come in very short order, with an efficient process having reaped quick rewards for International Game Technology's shareholders.

Family Dollar climbed almost 11% as activist investor Carl Icahn took a 9% position in the dollar-store retailer. Even though the economic recovery has been relatively sluggish for the lower-income customers that tend to gravitate to Family Dollar and its dollar-store peers, intense competition within the industry has made it hard for Family Dollar to stand out from the crowd and produce the same returns that dollar stores gave investors during the last recession in 2008. Icahn's plan involves seeking consolidation within the industry, following the lead of other sectors of the stock market in which post-merger survivors have had a much better time generating profits. If successful, making Family Dollar a merger candidate could be the key to investors' long-term success.

Newfield Exploration gained 8.5%. Energy stocks were a bright spot in a dim market environment this week, as the conflict in Iraq boosted oil prices. Many see Newfield Exploration as one of the shining stars in the U.S. energy industry, having divested itself of its international assets in order to focus squarely on its opportunities in the domestic market. Key assets in the Williston Basin / Bakken region and the Eagle Ford shale play give Newfield a solid base, and opportunities elsewhere across the country have plenty of growth potential to carry Newfield further still.

After this week's losses, investors seem much less certain about the S&P 500's eventual trajectory. Even though just a week ago, many expected S&P 2,000 in short order, it could now take a long while before the S&P reaches that key level.

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