Why Silver Standard Resources, Burlington Stores, and Select Comfort Are Today's 3 Best Stocks

Heightened global tensions send the S&P 500 to its worst loss in more than three months as Silver Standard Resources, Burlington Stores, and Select Comfort shares all buck the trend.

Jul 17, 2014 at 5:15PM

It's been a long time since investors have had a duck-and-cover trading day; but today was one of those days, with U.S. economic data being mixed, and political tensions around the globe heightened.

Longview

If there was positive news to be found today, it was in the weekly initial jobless claims report. This week's seasonally adjusted number dropped to 302,000, nearing a multi-year low. This figure is giving us crucial insight into the health of the jobs market, and is implying that there's a good chance the U.S. unemployment rate could dip below 6% in the near future.

However, other U.S. economic data, especially from the housing sector, wasn't nearly as bright. Housing starts for June plummeted 9.3% to a seasonally adjusted annual rate of 893,000 from a revised-down 985,000 in May. Despite the NAHB Market Index moving up and signifying that homebuilders felt more confident about their future, this figure would imply that builders are being more cautious than ever about adding new inventory to the market, with the Federal Reserve on the precipice of hiking lending rates within the next six to 12 months. I would still suggest that housing is one sector to steer clear of in the near term.

Even worse, though, was news this morning that a Malaysian Airlines passenger jet carrying 295 people had reportedly been shot down in Ukraine by a surface-to-air missile. Tensions between Ukraine and Russia, and the United States and Russia, are already thick enough that you could cut them with a knife. Also, the back-and-forth sanction game between the U.S. and Russia is only making things worse. Today's tragic disaster will only further shine light on this regional tension, and is causing a serious case of indigestion for global investors.

By day's end, the broad-based S&P 500 (SNPINDEX:^GSPC) was pushed lower by 23.45 points (-1.18%) to close at 1,958.12, marking the worst day for the S&P 500 since April 9. Despite the downdraft, three companies managed to trudge their way significantly higher.

In a non-surprise, leading the pack higher today was metal miner Silver Standard Resources (NASDAQ:SSRI), which gained 9.6% on the day following both a strong move for silver prices, as well as commentary from research firms Zacks. Specifically, Zacks' research notes that EPS estimates have improved noticeably during the past couple of weeks for Silver Standard Resources, which could bode well for shareholders in the near term. It also doesn't hurt that spot silver prices roared back above $21/oz. after a two-day swoon. Metals are a common safe-haven investment for traders when the markets are deeply in the red.

While Silver Standard has had little issue rapidly growing its top line, and it would certainly feed off of increased volatility and fear from investors, its earnings history is riddled with misses, and it's still valued somewhat aggressively at 37 times forward earnings. If I were looking for a miner to invest in, I would suggest looking elsewhere, as there are better values to be had than the currently unprofitable Silver Standard Resources.

Branded apparel retailer Burlington Stores (NYSE:BURL) jumped 8.3% for the day after it announced the launch of a debt-refinancing transaction this morning, and updated its comparable same-store sales guidance for the second quarter.

Www
Source: Random Retail, Flickr.

As the press release notes, Burlington is seeking a commitment from its lenders for a new credit facility in the amount of $1.2 billion that would consist of a single tranche of loans due to mature in 2021. Burlington anticipates that gaining these concessions from its lenders would result in $0.13-$0.14 per share in additional EPS for the second half of 2014, and $0.27-$0.30 on a pro forma basis for 2014.

Also, Burlington updated its same-store sales guidance for the second quarter to a fresh range of 3%-4% growth from a previous projection of 2%-3% growth. Although gross margin is expected to be similar to its previous quarterly guidance, Burlington did announce an expected 10 to 20 basis-point improvement in its adjusted EBITDA margin rate compared to the prior year.

It's definitely good news to see Burlington outperforming in a tough retail environment, and it demonstrates just how important having brand-name merchandise is to drawing consumers in its stores. However, following today's move higher, the company isn't nearly as attractive on a valuation basis. At 18 times forward earnings, an overall growth rate of 6% with organic growth of 3%-4% just doesn't seem too enticing. Given the company's lack of a dividend, I believe you have enough of a reason to pass on Burlington.

Finally, sleep-solutions company Select Comfort (NASDAQ:SCSS) will allow its shareholders to sleep easier tonight after reporting better-than-expected second-quarter earnings results that sent its shares higher by 8.3%. For the quarter, Select Comfort saw its sales improve 13%, to $235 million, as same-store sales rose 7% from the year-ago period. Adjusted EPS, however, fell to $0.16 from $0.18 in Q2 2013. Comparably speaking, though, Wall Street was only expecting Select Comfort to earn $0.14 per share on $224 million in sales. Furthermore, Select Comfort announced its intention to open 20 to 30 stores in 2014, and reaffirmed its prior full-year EPS guidance of $1.07.

Www
Source: Tony Cecala, Flickr.

Select Comfort didn't go deeply into the specifics of why their sales improved other than to mention that their new innovations are beginning to take hold with consumers. This is good news, as innovation is what keeps the top-line growing organically, and what keeps investors happy. Then again, sleep-solution sales (i.e., mattresses and sleep products) have been erratic even following industry consolidation, and 16 times forward earnings could be a bit pricey for a company that has missed EPS estimates in the prior three quarters. For now, I'd suggest watching this company from the sidelines.

Want an easy way to manage big down days like this? Try seeking out high-yield dividend stocks like our top analysts recently did! 
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

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 has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers