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Why Herbalife, Sierra Wireless, and Atwood Oceanics Jumped Today

By Dan Caplinger - May 6, 2016 at 5:21PM

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These stocks led the market higher. Find out why.

Image source: Herbalife.

Friday brought some much needed relief to the stock market, but it didn't come easy. Early in the day, most major market indexes fell, following a monthly employment report for the U.S. that included only 160,000 new jobs created. That was the smallest gain in seven months, and a stable unemployment rate of 5% came only because of the shrinking size of the available labor force. Yet by the end of the day, investors seemed pleased about the potential for Federal Reserve interest rate increases to be further delayed until later in the year, and that turned the markets around to post gains of between a third and a half percentage point. Some stocks did even better, and Herbalife (HLF 5.43%), Sierra Wireless (SWIR -3.42%), and Atwood Oceanics (ATW) were all sharply higher on the day.

Herbalife finished up 9% after releasing its first-quarter results Thursday afternoon. The company reported sales gains of just 1%, weighed down by 10 percentage points of adverse currency impacts, but net income rose at a more impressive 23% rate. But potentially even more important than its near-term results was the company's announcement regarding its efforts to settle allegations from the Federal Trade Commission. The FTC has investigated for two years the potential that the marketer of nutritional supplements is a pyramid scheme, but according to the company, it thinks those investigations are coming to an end. Herbalife said it estimates a settlement in the $200 million range that could also include other provisions. With talks nearing a possible agreement, putting the episode behind it could leave Herbalife in a much healthier position going forward.

Sierra Wireless jumped 22% after a favorable earnings report of its own Thursday afternoon. The technology company posted a 5% decline in revenue, but Sierra's new cloud and connectivity business saw sales nearly double, and the company posted a significant $0.08 per share adjusted profit compared to calls for roughly breakeven results. Healthy performance from Sierra's Enterprise Solutions segment offset losses from the original-equipment manufacturing solutions division. More importantly, as investors get used to the company's transition toward taking greater advantage of all of the opportunities in the Internet of Things space, Sierra Wireless should have even more occasion to climb in the future.

Finally, Atwood Oceanics soared by a third. The offshore drilling specialist released its quarterly financial report late Thursday, and Atwood managed to keep its net income almost unchanged from year-ago levels despite a substantial drop of more than 15% in revenues. The energy company found ways to cut its costs significantly, and smart timing in snapping up Atwood's debt securities at a discount to par value also created a reportable gain for the quarter.

The company isn't out of the woods yet, but recent climbs in the price of crude oil could put a floor under the offshore market and potentially get revenue moving back in the right direction in the quarters to come.

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Stocks Mentioned

Herbalife Ltd. Stock Quote
Herbalife Ltd.
$21.56 (5.43%) $1.11
Sierra Wireless, Inc. Stock Quote
Sierra Wireless, Inc.
$22.60 (-3.42%) $0.80
Atwood Oceanics, Inc. Stock Quote
Atwood Oceanics, Inc.

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