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Investors Are Hungry for Tuesday's 2 Big Nasdaq Winners

By Dan Caplinger - Jun 8, 2021 at 3:36PM

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One had good news for investors, while the other just made stock buyers' mouths water.

Investors have had to deal with a lot of crosscurrents in the stock market lately, especially among the high-growth companies in the Nasdaq Composite (^IXIC -1.96%). Tuesday morning was no exception, with the Nasdaq initially moving higher but falling about a quarter percent by 11:45 a.m. EDT.

Yet on the Nasdaq exchange, there were still some noteworthy stocks making big gains. Stitch Fix (SFIX -14.60%) gained ground after reporting solid earnings in its most recent quarter. Meanwhile, Wendy's (WEN -0.87%) didn't have a lot of big news driving its stock higher, but investors who've followed the meme-stock trend looked beyond their normal stable of companies and cast their eyes on the fast-food favorite. Below, we'll look more closely at these two stock winners and what the future could hold for them.

Getting their Fix

Stitch Fix stock rose more than 12% Tuesday morning. The company behind the curated fashion-delivery subscription service had good things to say about its business in its most recent report.

Stitch Fix's fiscal third-quarter performance was noteworthy. Revenue jumped 44% year over year, with Stitch Fix's client count rising 20% from last-year's quarter to more than 4.1 million subscribers. In particular, the company got good demand both from first-timers and those who had previously tried Stitch Fix, gave up on it temporarily, but then came back to try again.

The fashion curator also is making strides on its strategic initiatives. Results were good not only in its core women's segment, but also in the men's and kids' categories. The Fix Preview service is now available throughout the U.K. market and for more than half of Stitch Fix's U.S. customer base, and the new Shop by Category feature will help shoppers buy more of what they like when they see it.

Stitch Fix now expects sales for the full fiscal year to come in between $2.07 billion and $2.08 billion, which represents growth of roughly 21%. As founder Katrina Lake makes the transition out of the CEO role in favor of Elizabeth Spaulding, investors like what they're seeing in Stitch Fix's direction.

People in line at a mall food court, with cashier waiting.

Image source: Getty Images.

Wendy's is hot

Shares of Wendy's did even better. The stock was up nearly 18% Tuesday near midday.

Most market participants attributed the move in Wendy's stock to the meme-stock craze, which has started to broaden beyond its initial focus. Although other popular meme stocks continued to post gains, it's evident that investors following that trend are looking for fresh new ideas that they hope to ride to greater profits.

Yet Wendy's has some challenges to overcome. Wage pressures are putting financial pressure on franchisees, and the restaurant industry remains starkly competitive. Wendy's efforts to offer breakfast seem to be resonating with patrons, but it's not as though the chain is unique in opening before lunch to hungry customers.

Nevertheless, even with the stock at 17-year highs, some traders believe that there's more upside for the fast-food restaurant chain. That's an ambitious call that's not necessarily supported by the fundamentals of the business, but those who have shied away from the benefits of long-term investing in search of faster gains have been, for now, rewarded for their boldness.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Stitch Fix. The Motley Fool has a disclosure policy.

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Stocks Mentioned

StitchFix Stock Quote
$6.67 (-14.60%) $-1.14
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$12,711.00 (-1.96%) $-254.34
The Wendy's Company Stock Quote
The Wendy's Company
$21.14 (-0.87%) $0.18

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

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