Wall Street started the week on a muted note on Monday, as major benchmarks generally closed slightly down. Much of the attention among investors was on the bond market, where 10-year Treasury yields rose as high as 2.99%, signaling to some the possibility of much higher financing costs that could punish companies that overextended their balance sheets with debt when rates were much lower. Yet some individual companies had good news that sent their shares higher. McDermott International (MDR), Box (BOX -2.24%), and Hanesbrands (HBI -4.50%) were among the best performers on the day. Here's why they did so well.
McDermott gets an offer
Shares of McDermott International jumped 16% after the company received an unsolicited hostile bid from an industry peer. Norway's Subsea 7 made a nonbinding proposal to purchase the energy engineering and construction specialist for $2 billion, offering investors $7 per share for McDermott's stock. McDermott said that it considered and reviewed the proposal over the weekend and then rejected it today, arguing that it substantially undervalues the company. Moreover, McDermott has been working to acquire Chicago Bridge & Iron and still believes that that combination would be preferable to the Subsea 7 bid, which was contingent on McDermott terminating its proposed acquisition. Nevertheless, the fact that shareholders bid the stock almost to the $7 level shows the excitement among some McDermott investors about the offer.
Palihapitiya thinks inside the Box
Box stock gained 11% in the wake of a presentation from a well-known venture capitalist at the Sohn Conference. Chamath Palihapitiya, who leads the Social Capital hedge fund, said that the cloud-content management specialist's shares were undervalued and inexpensive, with high exposure to the fast-growing artificial intelligence wave. It's true that Box has seen its stock come under pressure after reporting fiscal fourth-quarter results that failed to meet investor expectations. With products that assist clients with image recognition and searching tools that can scan through video and audio as well as ordinary text, Box stands to become increasingly important as the backbone of capabilities that users will rely on more extensively in the future.
Hanesbrands could snap back
Finally, shares of Hanesbrands rose 6%. The maker of underwear and other apparel has seen its stock plunge lately, but analysts at Stifel believe that Hanesbrands might finally be close to hitting bottom. Stifel upgraded Hanesbrands from hold to buy, noting that its Champion brand has helped the company diversify from its lower-priced namesake Hanes label products and enter the athletic and lifestyle apparel segments more aggressively. Despite exposure to brick-and-mortar retail woes and extensive debt, Hanesbrands hopes that recently announced acquisitions could help it bounce back during the remainder of 2018 and beyond.