Tuesday was another strong day for the stock market, as the Dow and Nasdaq Composite closed at fresh new all-time record highs. Major market benchmarks all closed higher by between a third and a half of a percent, taking the Dow to within 26 points of the 20,000 level. For the most part, all it seemed to take to keep investors happy was a failure of any bad news to upset the positive holiday mood, and market momentum continued to carry most stocks higher. Among the best performers were Fred's (NASDAQ:FRED), Calavo Growers (NASDAQ:CVGW), and CarMax (NYSE:KMX). Below, we'll look more closely at these stocks to tell you why they did so well.

Fred Pharmacy
Image source: Fred's.

Fred's, Rite Aid make a deal

Retailer Fred's soared more than 80% after the company said that it would acquire 865 stores from pharmacy retail specialist Rite Aid (NYSE:RAD). Fred's will pay $950 million in cash for the Rite Aid locations, which the drugstore chain is having to sell as part of its own merger agreement with Walgreen's. If regulators approve the deal, Fred's Pharmacy will suddenly become the No. 3 player in the drugstore chain industry, with locations across the country. CEO Michael Bloom noted that Fred's has worked tirelessly for several months to try to make the transition for existing Rite Aid customers as seamless as possible. With the deal more than doubling Fred's store count, investors are excited that the company took such a huge step forward in its strategic vision to emphasize the healthcare end of the retail business and capture its growth opportunities.

Calavo spices up its earnings

Calavo Growers jumped 16% in the wake of the avocado grower's fiscal fourth-quarter financial report. The company said that net income for the quarter nearly doubled from year-ago levels, with revenue climbing by nearly a fifth to hit a new fourth-quarter report. That capped an extraordinary fiscal 2016 for Calavo, which included net income growth of nearly 40% generated from internal sources. CEO Lee Cole said that he expects 2017 to be another banner year for the company, with expectations for more record results through expanding packinghouse and manufacturing capacity during the year, improving internal efficiency, and a business agenda that will prompt Calavo to take advantage of existing and new opportunities throughout the fresh food industry.

CarMax drives higher

Finally, CarMax climbed 6%. The vehicle retailer reported its third-quarter earnings Tuesday morning, which included modest rises in revenue and earnings. Used-car sales growth improved from weaker conditions earlier in the year, including a nearly 9% rise in unit volume and a 5.4% jump in comparable used-car sales growth from year-ago levels. Even though CarMax's wholesale sales division didn't live up to what the rest of the company was doing, CarMax benefited from stronger credit records among its customers that generated more advantageous financing arrangements for the company. Looking ahead, investors believe that CarMax has the potential to keep benefiting as the auto industry moves forward, and the company is poised to keep expanding to serve as many customers as it can.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends CarMax. 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.