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Why Abercrombie & Fitch, Dollar Tree, and Tech Data Jumped Today

By Dan Caplinger – Nov 29, 2018 at 4:32PM

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Earnings are still playing a key role in pushing some stocks higher.

Thursday saw a small pullback for the stock market, as major benchmarks rebounded from steeper early losses but ultimately closed down. Most of the partial recovery came after the release of the latest minutes from the Federal Reserve's Open Market Committee, which showed that policymakers at the central bank have been grappling with mixed messages on the economic front in trying to blaze a trail forward on monetary policy. With investors increasingly believing that the Fed will be slow to boost rates further, sentiment turned positive for much of the late afternoon. Among individual stocks, good earnings results from several companies helped them buck the overall market's trend. Abercrombie & Fitch (ANF -2.20%), Dollar Tree (DLTR -2.17%), and Tech Data (TECD) were among the best performers on the day. Here's why they did so well.

Abercrombie dresses up

Abercrombie & Fitch saw its shares jump 21% after the apparel retailer released its third-quarter financial report. The company said that revenue was flat compared to year-ago levels, but comparable sales were higher by 3%, led by strength in the domestic market and especially in its Hollister stores. Moreover, shareholders seemed satisfied with guidance for the holiday quarter, as even though Abercrombie expects a drop in overall revenue due largely to calendar shifts, comps should rise by low-single-digit percentages, and the retailer hopes that fewer store closings will prove necessary than it originally thought.

Sweatshirt with Abercrombie & Fitch logo on it.

Image source: Abercrombie & Fitch.

Dollar Tree makes progress

Dollar Tree stock gained 6%, rebounding from the losses it initially suffered after reporting its third-quarter results. In early morning trading, investors seemed to be dissatisfied with the dollar-store retail specialist's performance, which included solid same-store sales gains of 2.3% at the namesake Dollar Tree stores but a drop of 0.4% in comps at Family Dollar. Lower guidance for the full 2018 fiscal year than previously anticipated also weighed on shares. Yet later in the session, it appeared that news of substantial repayments of debt gave shareholders some reassurance. With activist investor Carl Icahn having recently taken a stake in the stock, many are hopeful that Dollar Tree will stay on an upswing for a while.

Tech Data just keeps growing

Finally, Tech Data shares rocketed 22% higher. The provider of technology services saw its past success continue during the third quarter of its 2019 fiscal year, including revenue gains of 11% that helped send adjusted net income higher by more than half from year-ago levels. Tech Data was particularly successful in reining in costs, with overhead expenses falling by more than $20 million during the period. Add to that solid guidance for the immediate future, and investors are feeling better than ever about the prospects for Tech Data to keep producing solid growth in a sector that shows few signs of slowing down soon.

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.

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Stocks Mentioned

Dollar Tree, Inc. Stock Quote
Dollar Tree, Inc.
DLTR
$138.23 (-2.17%) $-3.06
Tech Data Corporation Stock Quote
Tech Data Corporation
TECD
Abercrombie & Fitch Co. Stock Quote
Abercrombie & Fitch Co.
ANF
$15.53 (-2.20%) $0.35

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