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Best Buy Co., Inc. (BBY), Netflix, Inc. (NFLX), Pioneer Natural Resources (PXD): The S&P 500’s Best Stocks in August

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Although we don’t believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes — just in case they’re material to our investing thesis.

The S&P 500 (SNPINDEX:^GSPC) didn’t manage to post quite as big a loss as some other popular market measures, but its 3.1% decline still marked its worst performance since May 2012. Further rises in bond yields and a continued climb in gold prices reflected the uncertainty that stock investors felt about the future of the market. Moreover, with September seen as a seasonally weak part of the year, traders with a more short-term mind-set got increasingly edgy about the prospects for the four-and-a-half year long bull market’s ability to last much longer.

Best Buy Co., Inc. (NYSE:BBY)

Despite the market’s overall weakness, though, several stocks in the S&P 500 (SNPINDEX:^GSPC) manage to produce sharp gains. Let’s look at the S&P’s four best performers in August.

Best Buy Co., Inc. (NYSE:BBY) rose 19.6%, topping the index. Just about all of the big-box electronics retailer’s jump came following its second-quarter earnings report, in which the company managed to produce almost triple the adjusted net income that investors had expected. Thanks to double-digit improvement in online sales and the success of cost-cutting measures, the stock managed to rally despite an overall decline in comparable same-store sales of 0.6% and an overall drop in revenue. Strength in sales of appliances as well as computers and phones helped offset weakness in consumer electronics, and investors are getting more comfortable with the idea that Best Buy will have to focus on services and high-margin items even if it means giving up much of its traditional business.

Netflix, Inc. (NASDAQ:NFLX) posted a 16.1% gain in August, even though it didn’t have any one catalyst driving the shares higher. The company rolled out its new profile platform early in the month, allowing individual family members to have recommendations tailored to their own tastes. The good news for investors is that the company will charge $4 extra to allow up to three or four people to stream from the same account, which individual profiles will likely make happen more frequently. Improved recommendations stemming from analysis of viewing habits should also make the service more valuable and hopefully driving subscriber growth.
Pioneer Natural Resources (NYSE:PXD) climbed 13.1% for the month. Just about all of its gain came on the first day of the month, when the oil and gas exploration company posted a 29% gain in revenue in its quarterly earnings report and boosted its future guidance on production growth to the upper end of a previous range.
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