Top 3 Stocks on the S&P 500 Last Week

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The S&P 500 not only ended its losing streak last week; it had its best week in all of 2023, rising 5.9% to 4,358 as of Monday morning’s open. The other major indexes were up last week too, as the Dow Jones Industrial Average gained 5.1%, and the Nasdaq Composite was up 6.6%.

While Apple released a less-than-stellar earnings report last week, it had little impact on the overall market, especially compared to the Federal Reserve’s decision to hold the line on interest rates and the worse-than-expected jobs report. However, that disappointing jobs report was actually better for investors, as it showed that the Fed’s rate hikes may finally be cooling off inflation, as designed.

Interestingly, two of the top three stocks last week came from the entertainment industry: Paramount Global (NASDAQ:PARA) and Warner Bros. Discovery (NASDAQ:WBD), which finished first and third, respectively. The second-best performer was Generac Holdings (NASDAQ:GNRC)

1. Paramount Global – Up 28.6%

Paramount Global, which owns CBS, Paramount Pictures, Showtime, and Paramount+, among other networks, reported a big third quarter, which sent its stock price soaring. The company’s revenue rose 3% year over year, while its operating income surged 10% and net earnings jumped 27% to $295 million.

The major driver was Paramount’s direct-to-consumer (DTC) business, which saw revenue climb 38% overall. Subscription revenue rose 46%, while advertising revenue increased 18% in the quarter. Within that group, the subscription-based Paramount+ business had a huge quarter, as revenue climbed 61%.

After that strong quarter, CEO Bob Bakish said DTC losses this year are now expected to be lower than they were in 2022, “meaning streaming investment peaked ahead of plan.”

While Paramount’s TV media business saw its revenue decrease 8%, its films division reported a 14% year-over-year rise in revenue, led by strong showings from the films Mission: Impossible – Dead Reckoning Part One and Teenage Mutant Ninja Turtles: Mutant Mayhem.

Paramount Global was up 28.6% last week but is still down 18.6% YTD.

2 . Generac Holdings – Up 27.6%

Generac Holdings was also lifted by its third-quarter earnings report, which was posted on Nov. 1. While the generator manufacturer’s net revenue fell 2% in the quarter, its gross profits rose 4%, and its operating income climbed about 20% year over year. Further, Generac’s gross profit margin was 35.1%, up from 33.2% in the third quarter of 2022. The margin increase was due to a combination of lower raw material and logistics costs and improved production efficiencies.

Overall, Generac beat earnings estimates as its net income came in at $60 million or 97 cents per share, compared to $58 million or 83 cents per share, for the same period in 2022.

“We experienced a strong sequential increase in shipments of home standby generators during the quarter as higher activations are driving field inventories towards more sustainable levels,” said Generac President and CEO Aaron Jagdfeld.

The company also maintained its net sales guidance for 2023, reiterating a decline of 10% to 12% for the full year, while its adjusted EBITDA margin is expected to be between 15.5% and 16.5%, also unchanged from the previous guidance. Following the earnings release, Generac was upgraded to a Buy by two Wall Street analysts, Guggenheim and Stifel, which helped propel its share price higher.

Generac stock finished the week up 27.6% and was up about 4% YTD at the market open Monday.

3. Warner Bros. Discovery – Up 23.2%

Warner Bros. Discovery rose 23.2% for last week. Year to date, the stock was up about 24% as of Monday morning, trading at just over $11 per share. Warner Bros. Discovery did not report its third-quarter earnings last week; it’s actually scheduled to report its earnings on Nov. 8.

However, its stock has increased some 10% since last Thursday, buoyed in part by a strong report from its competitor Paramount Global that same day. Stocks throughout the streaming space were up last week, including Walt Disney (NYSE:DIS).

A big catalyst for streaming stocks last week was the blowout quarter by Roku (NASDAQ:ROKU), which gained a ridiculous 50% last week to $84.75. However, Roku is not in the S&P 500, so it’s not listed among the top three here.

Roku’s numbers were impressive and raised all boats in the streaming space as its revenue climbed 20% year over year, while the number of active accounts increased 16%, and the number of streaming hours grew 22% compared to the third quarter of 2022.

Stay tuned for Warner Bros. Discovery’s earnings report on Nov. 8.