These 2 Stocks Were Fed-Proof on Thursday

Thursday finally dealt major market benchmarks a losing day, with the Nasdaq Composite (^IXIC 2.02%) breaking a long winning streak to fall nearly 1%. The S&P 500 (^GSPC 1.02%) and Dow Jones Industrial Average (^DJI 0.40%) also fell, responding to comments from Fed Chair Jerome Powell that the central bank intends to stay flexible to react to whatever the economy demands from monetary policy.

Data source: Yahoo! Finance.

Even as markets fell, though, there were some bright spots for investors. Duolingo (DUOL 3.64%) and TransDigm Group (TDG 0.20%) are in very different parts of the corporate world, but they both presented favorable financial results to their shareholders. Read on to learn why these stocks did so well on Thursday.

Duolingo says the words investors want to hear

Shares of Duolingo soared 21% on Thursday. The maker of foreign language software released third-quarter financial results that included an unexpected profit, and its growth strategy appears to be solidly intact.

Duolingo's numbers showed just how popular the company's products have become. Revenue of $138 million was up 43% year over year, with total bookings climbing by nearly half from year-earlier levels. The company surprised investors by making $2.8 million under generally accepted accounting principles (GAAP), and adjusted pre-tax operating earnings soared more than tenfold to $22.5 million.

Duolingo got a lot of traction from its users, as subscription revenue soared 47% to make up the vast bulk of the company's overall sales. Monthly active user counts jumped 47% to 83.1 million, while daily active users reached 24.2 million, up 63% from 12 months ago. Although just a small fraction of users subscribes, the number of paying customers rose 60% to 5.8 million.

Investors were pleased to see Duolingo guide for continued growth, anticipating revenue of between $145 million and $148 million and adjusted pre-tax operating earnings of between $28.7 million and $30.7 million. With new products like its math and music courses becoming available on its flagship app, Duolingo has a number of growth drivers pushing it forward.

TransDigm flies higher

Also gaining were shares of TransDigm Group, which rose 9%. The aircraft components manufacturer reported strong fiscal fourth-quarter financial results for the period ended Sept. 30 and gave shareholders a sizable bonus.

TransDigm's results were noteworthy in a tough macroeconomic environment. Revenue of $1.85 billion was up 23% year over year. Adjusted net income climbed 47% from the prior-year period to $460 million, and earnings came in at $8.03 per share, 46% higher than in the fourth quarter of fiscal 2022.

In addition, TransDigm expects to keep growing in fiscal 2024. Full-year projections called for sales of between $7.48 billion and $7.68 billion, which would be 14% to 17% higher than the final figures for fiscal 2023. Adjusted earnings of between $31 and $32.94 per share would be as much as 27% higher than in the just-finished year, as TransDigm expects to see growth in commercial original equipment manufacturer sales of around 20% and solid gains elsewhere.

Best of all, TransDigm said that it has so much cash available, it has decided to pay a special dividend of $35 per share to its shareholders. The company still thinks it will have plenty of liquidity even after the payout. That's rare in today's market, but investors appreciated it even as they celebrated TransDigm's ongoing growth.