The broad market may be down since the beginning of the year, logging yet another loss last month. But not every name is being upended. A handful of stocks are managing to defy the odds -- as well as the headwinds -- to log strong streaks of higher highs.
And despite these surprisingly sharp surges, some names are still great buys at their present prices. Here's a closer look at three of them.
As far as discount retailers go, Ollie's Bargain Outlet (OLLI 1.73%) isn't a top-of-mind name. The $3.8 billion company only does about $2 billion worth of business every year through its 385 stores, making it one of the smaller chains in this category of the retailing world.
What Ollie's lacks in size, however, hasn't been a problem for investors of late. The shares rallied 25% last month, taking a sizable bite out of a pullback that got going way back in early 2021.
Although other chains like Big Lots may dabble with the business model, Ollie's truly is an overstock and closeout retailer. A spate of store closings, underway even before the COVID-19 pandemic shutdowns, gummed up an already-complex flow of goods and merchandise to mainstream retailers. This, in turn, slowed the transfer of this merchandise to Ollie's stores.
As the world eases back to normalcy, so too should Ollie's operations. Things are looking so bright, in fact, that the company is still touting long-term plans to establish more than 1,000 retail venues. An economic slowdown will only help drive this growth, ironically enough. That's when value becomes an even-bigger hit with consumers -- and Ollie's oft-used slogan is a blunt "good stuff cheap."
And it doesn't necessarily hold that rekindled economic growth works against a value-oriented retailer like Ollie's. The economic soft patch stemming from the 2007-2008 subprime mortgage meltdown was a major growth driver for comparable Dollar General, but even once that headwind reversed into a tailwind, many of its bargain-minded shoppers stuck with the company to keep receiving the value that the retailer offered. Ollie's may well experience a similar growth surge.
No, this isn't a misprint -- the same AT&T (T -1.24%) that's been clumsily phasing out of the video and entertainment business (and arguably should have never gotten into in the first place) is drawing a crowd of fresh buyers. The stock's up 28% from its mid-December low, and within sight of new 52-week highs.
Making the persistent strength even more surprising is the fact that the stock's current quarterly dividend of just under $0.28 per share is still markedly lower than the payout shareholders were receiving before the telecom giant sold its WarnerMedia unit to Discovery, which promptly became Warner Bros. Discovery.
There's a method to the madness, so to speak. The lowered dividend reflects AT&T's intent to invest more of its post-split earnings into its own growth than it has in the past. The new payout only consumes on the order of 40% of the company's free cash flow, which is an ideal balance.
AT&T is never going to be a high-growth company. Even if it does make smart investments and at the same time accelerate its debt repayment, the wireless market is saturated. Pew Research says 97% of Americans already own cellphones, and that 85% of U.S. residents already own smartphones that require higher-end plans. So any market growth is going to come solely from population growth.
If you're looking for a reliable, generous dividend, though, the stocks' forward-looking dividend yield of 5.2% is attractive enough.
Finally, add Northrop Grumman (NOC -2.79%) to your list of companies that may not be done soaring yet. Even after its 32% run-up in the past year to a record high, the stock's forward-looking P/E (price-to-earnings) ratio of less than 18 leaves plenty more room to add valuation here, even with just sub-par growth.
And growth isn't likely to be a problem. Although a projected 2.5% revenue increase this year isn't thrilling and next year's expected top-line growth of 4.3% isn't a whole lot more exciting, Northrop is a well-established company in the defense and aerospace industry. It knows how to turn revenue into earnings. While this year's bottom line is apt to slump due to supply chain disruptions, next year's projected per-share profits of $27.29 would be 6.5% higher. This could mark the start of a much-needed wave of sales growth for Northrop Grumman.
It's certainly making the right products. Northrop Grumman is a key contributor to NASA's James Webb telescope, provides the U.S. military with autonomous drones, manufactures and maintains the B-2 stealth bomber, and makes a bunch of military training and combat communications systems.
For better or worse, the need for these tools is never likely to go away. The need is only likely to expand in time if the coming year's funding request from the Department of Defense (DoD) is any indication. The DoD is asking for $773 billion from the government for next year, up 4.1% from the previous year's need, and extending a seven-year streak of military spending growth that, were it not for 2011's Budget Control Act, could have easily been decades' worth of uninterrupted annual spending growth.