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Why Cooper Tire & Rubber, Mercury General, and ON Semiconductor Jumped Today

By Dan Caplinger – Oct 29, 2018 at 4:31PM

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Find out how these stocks managed to post gains on a tough day on Wall Street.

The stock market stayed turbulent on Monday, jumping out to big gains early in the session only to finish solidly down by the close. After having been up as much as 225 points, the Dow Jones Industrial Average ended with a loss of over 200 points, and the Nasdaq Composite fell more than 1.5%. Market participants reacted negatively to escalating tensions on the trade front, as talk out of Washington of new tariffs on Chinese goods created more uncertainty. Yet some companies reported good earnings results, and Cooper Tire & Rubber (CTB), Mercury General (MCY -1.38%), and ON Semiconductor (ON -2.26%) were among the best performers on the day. Here's why they did so well.

Cooper rolls forward

Shares of Cooper Tire & Rubber soared 21% after the tire maker announced its third-quarter financial results. Cooper's fundamental performance didn't look all that strong, including just a 0.1% rise in unit sales volume, a 0.5% increase in revenue, and a 13% decline in net income. But investors had expected far worse, and even though the company's index of raw materials costs was up 12% compared to year-ago levels, CEO Brad Hughes was optimistic about Cooper's performance. Even the modest gains Cooper achieved were better than what the broader U.S. tire manufacturing industry showed during the period. Despite ongoing concerns about trade wars, shareholders were willing to look ahead to a potentially more prosperous future for the tire maker.

Banner with Cooper Tire logo and slogan hanging from New York Stock Exchange pillars.

Image source: Cooper Tire & Rubber.

Mercury rising

Mercury General stock picked up 15.5% in the wake of the company's release of third-quarter financials. The insurance specialist said that net income jumped by more than a quarter on a 9% rise in net premiums written, as catastrophic loss experience was much more favorable for Mercury than it was the previous year. In addition, the company boosted its quarterly dividend to $0.6275 per share, marking the 32nd straight year in which Mercury has made dividend increases. With the boost amounting to just a quarter of a cent, it's hard to get too excited about it, but with a yield of nearly 5%, Mercury has done a good job of delivering capital to income investors.

Game ON

Finally, shares of ON Semiconductor finished higher by 9%. The chipmaker said that revenue climbed 11% during the third quarter of 2018 compared to the year-earlier period, and that helped ON's net income soar by more than half. CEO Keith Jackson attributed the chipmaker's success to getting more of its products into key applications in areas like automotive, industrial, and power management related to cloud computing, and he pointed to "a strong design win pipeline and expanding portfolio of power, analog, and sensor products" in positioning itself for future growth. The tech sector is going through some growing pains, but at least for now, ON Semiconductor looks like it's making all the right moves.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Cooper Tire & Rubber Stock Quote
Cooper Tire & Rubber
Mercury General Stock Quote
Mercury General
$35.70 (-1.38%) $0.50
ON Semiconductor Stock Quote
ON Semiconductor
$70.53 (-2.26%) $-1.63

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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