Investors came into Friday morning's stock market trading session on a positive note, reversing several weeks of downward pressure on the Nasdaq Composite (^IXIC -0.42%) and other major market indexes. News that the U.S. economy had created 315,000 jobs in August seemed to hit the sweet spot in many market participants' minds, showing solid gains in the workforce but also perhaps constraining the Federal Reserve from being too aggressive with future interest rate increases. As of 9 a.m. ET, Nasdaq futures had risen about half a percent.
Investors who like to focus on business fundamentals also got good news. A strong financial report from a key player on the Nasdaq and a takeover bid for a smaller company helped bolster the projected gains for the index. Below, you'll learn more about why Lululemon Athletica (LULU 0.48%) and Hollysys Automation Technologies (HOLI -2.01%) were making big moves higher on Friday.
Lululemon stays healthy
Shares of Lululemon Athletica jumped nearly 10% in premarket trading on Friday morning. The yoga retailer and maker of other athletic apparel released its latest results late Thursday, and investors were impressed by the staying power of the company even in the face of pressures on multiple fronts.
Lululemon saw its revenue jump 29% year over year in the fiscal second quarter ending July 31, finishing at $1.87 billion. Comparable sales were up 23% from the year-ago period. Lululemon's earnings grew even faster, coming in at $2.20 per share on an adjusted basis, up 33% year over year.
The profit gains were particularly encouraging given the fact that Lululemon saw the same pressures on margins that many of its peers had reported earlier. Gross margin was down more than a percentage point and a half to 56.5%. However, disciplined efforts to rein in other costs helped boost operating margin slightly.
Lululemon's sales and earnings have more than doubled in the past three years, showing its consistent performance throughout the COVID-19 pandemic. Even with the supply chain challenges it faces, the athletic apparel retailer pointed to strong success in areas like belt bags and specialized items for sports like tennis and golf. Consumers appear ready and willing to pay up for Lululemon's premium products, and that spurred the company to boost its guidance for 2022 to expect revenue of $7.87 billion to $7.94 billion and adjusted earnings of $9.75 to $9.90 per share.
Hollysys could have a buyer
Gains for Hollysys Automation Technologies were even stronger, as shares picked up almost 20% in premarket trading. The Chinese provider of automation and control systems is reportedly the target of a management-led leveraged buyout that could take the company private.
Founder/CEO Changli Wang and other members of the Hollysys management team are part of a team of investors looking to make a bid for the company, according to reports from Reuters. Sources for the reports suggest that the deal could be worth $1.8 billion, valuing the industrial automation and rail transport systems specialist at a substantial premium to its recent market capitalization.
Hollysys has seen its revenue and income remain consistently solid over the past several years, but shareholders have been frustrated with the lack of response in the stock price. With some uncertainty among U.S. investors about Chinese companies listed on the Nasdaq more broadly, Hollysys shares fetch less than 13 times trailing earnings as of Thursday's close.
If the hostility toward U.S.-listed stocks of businesses based in China continues, then shareholders can expect to see more companies taken private. That wouldn't necessarily be good for long-term investors, as it takes away the chance to share in the future success of Hollysys and any other companies that no longer trade on stock exchanges in the years to come.
