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The Sky's the Limit for Friday's 2 Hottest Stock Market Winners

By Dan Caplinger - Updated Jun 25, 2021 at 2:15PM

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The stock market continued to ride its positive momentum on Friday, closing an extremely strong week for Wall Street. As of 11:45 a.m. EDT, the Dow Jones Industrial Average (^DJI -0.50%) was up 219 points to 34,416. The S&P 500 (^GSPC -0.72%) had gained 12 points to 4,278, pushing further into record territory, while the Nasdaq Composite (^IXIC 0.00%) settled for a small gain of 7 points to 14,376.

A couple of stories made investors feel more confident about the overall economy and the prospects for innovative companies. Nike (NKE -0.86%) announced blowout earnings results in its most recent quarter, sending the Dow component soaring. Meanwhile, Virgin Galactic Holdings (SPCE -4.26%) made a key announcement that will pave the way toward making good on its literally skyrocketing potential.

Nike gets it done

Shares of Nike soared nearly 14% on Friday morning. That took the athletic apparel pioneer to a new all-time high, as investors celebrated the numbers from Nike's fiscal fourth-quarter report.

Its results were outstanding. Revenue nearly doubled year over year to $12.3 billion, representing a 21% gain from the same period two years ago, before the pandemic. Despite headwinds throughout much of the fiscal year due to the pandemic, full-year revenue climbed 19%. Nike had great success with its direct sales channel, which showed 73% growth in the quarter. Earnings of $0.93 per share were nearly double what most investors had expected to see and closed a solid year for the company.

Nike's future looks equally bright. The company issued guidance for revenue to climb above the $50 billion mark for fiscal 2022, which is considerably higher than most of those following the stock were looking for. Given the success it has had with online and other direct sales channels, Nike expects to keep making that a bigger part of its business, giving up less to third-party retail channel partners and keeping more of its profits for itself.

Nike's stock has tripled in less than five years, which is extremely impressive for a consumer goods company that already had strong pricing power. Shareholders nevertheless have high hopes that Nike can keep up the pace and keep setting new records well into the future.

Seats inside spacecraft looking at Earth from space.

Image source: Virgin Galactic Holdings.

FAA gives Virgin Galactic the go for launch

Gains for Virgin Galactic were even more impressive, as the stock had soared 32% at midday on Friday. Investors got a nice surprise from regulators at the Federal Aviation Administration, which helped the space tourism company clear a key hurdle that gives Virgin Galactic the inside track toward getting people into the sky.

Virgin Galactic received word from the FAA that it had updated the space tourism specialist's commercial space transportation operator license. The company will now be allowed to fly customers into space. The move represents the FAA's first licensure of a space-going enterprise to allow paying clients to fly. It also validates the extent to which Virgin Galactic has made safety and testing a priority, sometimes to the disappointment of impatient investors who would've preferred a faster timeline into space.

Virgin Galactic still has a few test flights left on its schedule, but executives are excited about its prospects. As CEO Michael Colglazier noted, the FAA decision and Virgin Galactic's own review of its May flight data give it confidence that its planned full-crew test flight for later this summer will go well.

With the news, Virgin Galactic's stock returned to levels last seen during the euphoric market period in January and February 2021. The company has made a lot of fundamental progress since then, though, and today's stock price has a lot more support from its underlying business.

Dan Caplinger owns shares of Nike and Virgin Galactic Holdings Inc. The Motley Fool owns shares of and recommends Nike and Virgin Galactic Holdings Inc. The Motley Fool has a disclosure policy.

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Stocks Mentioned

NIKE, Inc. Stock Quote
NIKE, Inc.
$117.04 (-0.86%) $-1.02
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$33,980.32 (-0.50%) $-171.69
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$4,274.04 (-0.72%) $-31.16
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$13,102.55 (0.00%) $0.00
Virgin Galactic Holdings, Inc. Stock Quote
Virgin Galactic Holdings, Inc.
$6.74 (-4.26%) $0.30

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

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