2 curious stock winners on a terrible Friday on Wall Street

Equity markets remained under pressure on Friday, ending a difficult week that sent key market benchmarks sharply lower. the Dow Jones industry average (DJINDIZES: ^ DJI) has done pretty well but is still around 1,850 points below its mid-November highs, a 5% correction. the S&P 500 (SNPINDEX: ^ GSPC) is only 4.5% below its best, but the Nasdaq composite (NASDAQINDEX: ^ IXIC) has seen a lower correction of around 7% from its highs.

index

Daily percentage change

Daily change of points

Dow

(0.17%)

(60)

S&P 500

(0.84%)

(39)

Nasdaq

(1.92%)

(296)

Data source: Yahoo! Finances.

Whenever the stock market is falling sharply, it makes sense to look for companies that are resisting the downtrend and moving up. On Friday there were a few odd stocks that were making big gains. Zillow group (NASDAQ: Z) (NASDAQ: ZG) and Krispy Kreme (NASDAQ: DNUT) Couldn’t be more different in terms of the respective business fields, but both managed to get into the weekend. So below, we examine these stocks to look for clues as to why they performed well today.

Zillow increases its sales

Zillow Group’s shares rose nearly 11% on Friday, undoing some of the big losses seen in recent weeks. The online real estate company has managed to correct a situation that took a number of investors by surprise, and what it is doing now has been a pleasant surprise for shareholders.

Image source: Getty Images.

Zillow reported that it managed to sell more than half of the homes in its portfolio under Zillow Offers’ iBuying program or to enter into a sale or disposition agreement. This is a “significant step forward” that Zillow referred to in dismantling what appears to be the company’s ultimate strategy. Zillow’s once-promising iBuying unit caused heartburn among investors when it reported in September that it had paused its buying activity because inventory had grown too high.

Co-Founder / CEO Rich Barton reiterated that Zillow will no longer operate Zillow Offers, arguing that doing so will make the company more capital efficient going forward. In addition, as a nod to shareholders, Zillow announced a buyback program of up to $ 750 million to use the proceeds from the property sales wisely from the investor’s point of view.

Figuring out how to deal with a company that is suddenly changing its business model can be difficult. Zillow still has many questions to answer, but investors were pleased to see at least some appreciation for Zillow’s need to be attentive to their interests.

A delicious day for Krispy Kreme

Krispy Kreme’s shares also rose 11% on Friday. The stock has seen a lot of volatility since it went public in late June, but while today’s gains haven’t made up for all of the donut maker’s losses since then, investors were nonetheless pleased with the progress.

The gains were carried over to the positive news on Thursday, when shareholders reacted positively to news that major investor JAB Holding had increased its exposure to Krispy Kreme beyond its current stake. JAB has entered into a derivatives agreement with an institutional investment company BNP Paribas, with a three-year total return swap that essentially gives JAB the right to cash in on positive stock price movements from BNP under the agreement. JAB already owns nearly 45% of Krispy Kreme and intends to remain an important part of Krispy Kreme’s capital structure for the foreseeable future.

However, not everyone is convinced that Krispy Kreme will be successful. Analysts at Goldman Sachs downgraded Donut stock from neutral to sell earlier this week and lowered its price target by $ 1 per share to $ 14. The company will face cost pressures as key ingredients face inflation. If that hurts profit margins, Krispy Kreme could find it difficult to continue growing.

Krispy Kreme’s recent financial results have been delicious, but it takes constant performance to keep shareholders happy. Investors will want to watch Krispy Kreme closely to see if it can hold the pace and expand further.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all reflect critically about investing and make decisions that will help us get smarter, happier, and richer.

About Paige McCarthy

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