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Why Maxar Technologies, Alamos Gold, and TrueCar Jumped Today

By Dan Caplinger – May 13, 2019 at 4:29PM

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Only an elite few stocks managed to avoid the market downdraft.

The stock market plunged on Monday as the trade conflict between the U.S. and China escalated further, with China retaliating against last week's U.S.-imposed tariffs by setting a deadline to add tariffs of their own on $60 billion in U.S. goods. Major benchmarks suffered losses of 2.4% to 3.4%, and the vast majority of individual stocks were lower as investors tried to assess the damage that a full-blown trade war would have on the global economy. Only a few companies managed to buck the downtrend and post share-price gains. Maxar Technologies (MAXR -3.70%), Alamos Gold (AGI -3.79%), and TrueCar (TRUE -1.22%) were among the top performers. Here's why they did so well.

Maxar makes a tax-savvy move

Shares of Maxar Technologies climbed 6% after the Canadian space technology solutions provider took action to ensure it would be able to benefit from a key tax break. Maxar said that it had adopted a tax benefit preservation plan that will allow it to preserve the value of its net operating losses and various tax credits that it's carried forward from past years. The company said that the arrangement should allow it to use $77 million in credits and $890 million in tax losses. The interesting thing about the plan is that it essentially creates a poison pill to deter would-be acquirers from acquiring 4.9% or more of the company's shares, with Maxar arguing that an ownership change would trigger the loss of the tax benefits. Given that Maxar just got a big cash insurance payment, holding opportunistic buyers at bay was just one reason why the company's move was smart.

Maxar logo of a black letter X with four corporate logos for its subsidiaries, against a night-sky backdrop.

Image source: Maxar Technologies.

Alamos shines bright

Alamos Gold's shares picked up 7% on a generally good day for the gold market. Gold often acts as a refuge for investors seeking to reduce the risk of their investment portfolios, and geopolitical tension in particular has historically led to higher gold prices. For Alamos in particular, news last week that the gold miner had found a high-grade gold deposit at its Island Gold property in northern Ontario reminded shareholders that the company has some promising mining properties in its portfolio. Alamos does face some challenges, but if the price of gold gains some traction in light of trade-related instability, then it can only help the gold miner's financial results improve in the future.

TrueCar bounces back

Finally, TrueCar's stock gained 6%. The online car-shopping service provider's stock had fallen dramatically on Friday following the release of its first-quarter financial results, which included a widening loss and revenue growth of just 6% from year-ago levels. A number of troubling metrics -- including relatively flat vehicle purchase volume and falling average transaction revenue per franchise dealer -- weighed on sentiment. TrueCar also reduced its guidance for the full 2019 year, with substantial cuts to both revenue and profit estimates. Shareholders seem to think that Friday's 15% drop in the stock was overblown, but today's gain only claws back a portion of that larger loss.

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

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Stocks Mentioned

Alamos Gold Inc. Stock Quote
Alamos Gold Inc.
$6.47 (-3.79%) $0.26
TrueCar, Inc. Stock Quote
TrueCar, Inc.
$1.62 (-1.22%) $0.02
Maxar Technologies Stock Quote
Maxar Technologies
$18.59 (-3.70%) $0.71

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