Over the past 12 months, the S&P 500 index has fallen about 7%, with much of the losses coming over the past three months. With the federal government having gone through a long partial shutdown, China and the U.S. debating a trade war, and worries about a potential economic slowdown, it's no wonder some investors are nervous about the market.
Still, just because there's some uncertainty right now (news flash: There always will be), that doesn't mean there aren't plenty of companies out there still worth investing in. In fact, some are performing exceptionally well in the market. lululemon athletica (NASDAQ:LULU), Zscaler (NASDAQ:ZS), and CV Sciences (NASDAQOTH:CVSI) are just three of the companies easily outperforming the market in the retail, technology, and cannabis industries. Let's take a closer look at what these companies are doing.
Lululemon: Up 89%
Check out the latest Lululemon earnings call transcript.
Lululemon, the brand synonymous with yoga pants, proves that retail certainly is not dead. The company's sales in the third quarter popped by 21% year over year and comparable sales were up 17%. Lululemon's quarterly results were boosted by the company's direct-to-consumer segment (i.e., e-commerce) sales, which jumped 44% from the year-ago quarter and now account for one-quarter of the company's total sales. Strong earnings growth followed all of those sales, with net income skyrocketing 60 to $94.4 million, or $0.71 per share.
Lululemon's management added to the good news recently when it raised its previous fourth-quarter revenue guidance to a range of $1.140 billion to $1.150 billion, up from the prior guidance of $1.115 billion to $1.125 billion. The company also increased its earnings-per-share range to $1.72 to $1.74, up from the previous $1.64 to $1.67. Lululemon will report its fourth-quarter results on Feb. 3, and management noted in a recent press release that it's optimistic that the company will benefit from a strong holiday quarter.
With the company's solid retail and e-commerce sales, it's no wonder Lulumemon's share price gains have easily beat the market. And with strong results expected for the fourth quarter, it appears the athleisure company may be on track to reach its ambitious goal of $4 billion in annual sales by 2020.
Zscaler: Up 185%
Check out the latest Zscaler earnings call transcript.
Zscaler may be smaller than its rivals, but this cloud-based cybersecurity's share price has easily outpaced the competition over the past year. The company's share price has gained 178%, whereas one of its biggest rivals, Palo Alto Networks, has gained 34% over the past 12 months.
The most recent spike in Zscaler's share price came last month when the company reported strong first-quarter results. Revenue grew by 59% year over year to $63.3 million, billings were up 56% from the year-ago quarter, and non-GAAP (generally accepted accounting principles) net income was $2 million, compared to a non-GAAP net loss of $7.5 million a year ago.
Adding to that positive news is the fact that Zscaler's management says full-year revenue will be between $268 million and $272 million, which would be a 42% year-over-year increase at the midpoint.
While the company is doing a fantastic job of growing sales, investors should keep in mind that some of the company's share price gains may be attributed to the fact that Zscaler just went public last March, which means some of the excitement around the company may be slightly inflated.
CV Sciences: Up 988%
And last but certainly not least is CV Sciences, which makes hemp-based cannabidiol (CBD) products. The cannabis industry has exploded over the past couple of years, mainly due to Canada's legalizing the sale of marijuana to adults for recreational use. But CV Sciences has made much of its gains on the back of its CBD and hemp products, and there's likely more to look forward to.
That's because the U.S. Farm Bill that was signed into law at the end of 2018 legalizes the production and interstate transfer of hemp-based products in the United States. CV Sciences' CBD oils are already among the most popular hemp-based products, and the new legislation could go a long way to helping the company boost its product sales even further.
CV Sciences sales are firing on all cylinders, with the company's third-quarter revenue skyrocketing 143% to $13.6 million and GAAP net income of $3.3 million, up from a loss of $590,000 in the year-ago quarter.
The cannabis industry is still in its nascent stage in the U.S., and it's likely that many stocks in this segment will see significant volatility over the coming years. But with the hemp-based product market expected to reach $20 billion by 2020, the company is in a perfect position to benefit as it expands.
One final thought
Of course, just because these companies are all performing well right now and have seen substantial gains over the past 12 months doesn't mean that investors should blindly jump in with these investments. Each company faces stiff competition in its market, and high-flying stocks often experience corrections sooner or later. That doesn't mean Lululemon, Zscaler, and CV Sciences should be avoided, but keep in mind that their past success doesn't guarantee their share prices will continue on their current trajectories.