The third quarter of 2022 saw the U.S. Federal Reserve raise its key policy rate by 150 basis points across two meetings to combat inflation. Meanwhile, in the last week of September, several data points came out shedding light on the U.S. economy, which included an unchanged Q2 U.S. GDP estimate and a lower than consensus corporate profit for Q2. Durable goods orders fell for the second straight month in August, though less than expected, but an improvement in consumer confidence for the second straight month was seen.
The SPDR S&P 500 Trust ETF (SPY) was in the red for Q3 (-6.31%), having declined -19.9% in the first half of the year. YTD, SPY is -24.80%. The Industrial Select Sector SPDR (XLI) shed -5.97% in Q3, after having lost -16.38% in H1. YTD, XLI is -21.71%.
The top five gainers in the industrial sector (stocks with a market cap of over $2B) all gained more than +40% each in the third quarter. However, YTD, only three of these five stocks are in the green.
Enovix (NASDAQ:ENVX) +110.26%. The Fremont, Calif.-based lithium ion battery maker started picking up momentum since July and swung to even higher gains in August following its Q2 earnings results. In July the stock grew and in August it soared +66.07%. In August, Loop Capital started coverage of Enovix with a Buy rating noting that the company could grow to be an $80B lithium battery beast. However, ENVX has also been among the top five decliners (in this segment) in the two months, and in September had shed (-17.11%) after been among the worst five performers for two weeks.
YTD, ENVX has declined -32.79%, the most among the top 5 gainers for Q3 in this period. The SA Quant Rating on the shares is a Hold, which takes into account factors such as Momentum, Profitability, and Valuation among others. EVEX has a D- factor grade for Valuation and A+ factor grade for Momentum. The rating is in contrast to to the average Wall Street Analysts’ Rating of Strong Buy, wherein 6 out of 8 analysts tag the stock as such.
Xometry (XMTR) +67.87%. The Derwood, Md.-based company — which provides a marketplace for manufacturing parts — has gained consistently in Q3, with the most in August (+28.97%), specially after its Q2 results, which beat estimates including revenue which grew +89% Y/Y. The stock also held a spot among the top five gainers for three weeks in September. The SA Quant Rating of Hold, with A+ score for Growth and factor grade of D for Profitability. The average Wall Street Analysts’ Rating differs with a Buy rating, wherein 3 out of 8 analysts see the stock as a Strong Buy. YTD, the stock has risen +10.81%.
The chart below shows YTD price-return performance of the top five gainers and SP500:
Atlas Air Worldwide (AAWW) +55.60%. The airfreight operator gained at the start of August following a $5.2B buyout offer by investor group led by Apollo Management. In September, however, there arose certain concerns around deals by the private equity firm. YTD, the stock has gained +1.54%, and is the only one besides XMTR among Q3 top gainers, which is in the green for this period.
Ameresco (AMRC) +44.93%. The Framingham, Mass.-based renewable energy solutions provider clawed back gains offsetting the losses incurred in Q2 (-44%) when the stock was among the worst five performers. The stock gained well in July and was among the top five gainers in one of the weeks. In last week of September, Bank of America upgraded AMRC to Buy with a $73 price target, noting that the degree of earnings momentum was underappreciated by the market. The SA Quant Rating on the stock is Hold, with Momentum possessing a factor grade of A+ and Growth with B+ score. The average Wall Street Analysts’ Rating differs with a Strong Buy rating, wherein 10 out of 13 analysts see the stock as such. YTD, AMRC has shed -18.37%.
Eve Holding (EVEX) +40%. The Melbourne, Fla.-based eVTOL aircraft maker’s stock gained momentum in September with being the top gainer for three weeks in a row. In September, Eve — which is backed by Brazilian aircraft maker Embraer — announced a $15M investment from United Airlines in Eve Air Mobility and a conditional agreement for 200 four-seat electric aircraft. The stock also saw growth in July by being among the top 5 gainers during a week. The SA Quant Rating on the shares is a Hold, with Profitability carrying a factor grade of F but Momentum has an A+ score. The rating is in contrast to to the average Wall Street Analysts’ Rating of Buy, wherein 2 analysts tag the stock as a Strong Buy while the other two see it as Hold. YTD, the shares have declined -9.23%.
The top five decliners in Q3 among industrial stocks (market cap of over $2B) all lost more than -33% each. YTD, all these five stocks are in the red.
ZIM Integrated Shipping (NYSE:ZIM) -45.70%. The Israeli shipping company has seen its stock value dwindle since the past few months, more notably in August and September. ZIM has been among the worst five decliners on several occasions in the past two months. Shipping stocks have felt the impact of a decline in container rates and a global economic downturn. SA contributor The Asian Investor says that ZIM currently gets a lot of attention due to its 80% dividend yield, but it does not see this yield as sustainable. Another SA contributor Envision Research too thinks that the dividend will not sustain and the cut may come sooner than many bulls expect.
YTD, ZIM has sunk -60.07%, the most among Q3’s worst five for this period. The stock was also among the worst five performers in June. The SA Quant Rating on ZIM is Hold, with Valuation possessing a factor grade of A+ and Momentum with a score of F. The average Wall Street Analysts’ Rating agrees with a Hold rating of its own, wherein 5 out of 7 analysts see the stock as such.
Kanzhun (BZ) -38.60%. The Beijing-based company’s shares have shown volatility this year with considerable ups and downs. The online recruitment platform provider saw its stock fall the most in September (-28.14%) (during Q3), while August witnessed gains and losses. Overall the stock did not perform well in July too, considering that it was among the top five (in this segment) in June.
YTD, BZ has declined -51.61%. The SA Quant Rating on the stock is Sell, with a D+ score for Profitability and a C for Growth. The rating is in stark contrast to the average Wall Street Analysts’ Rating of Strong Buy, wherein 8 out of 12 analysts tag the stock Strong Buy.
The chart below shows YTD price-return performance of the worst five decliners and XLI:
CAE (CAE) -38.19%. The Canadian flight simulation equipment and training solution provider’s stock did see some gains in July but that was offset in August (-31.04%), specially after posting mixed Q1 results, and in September. The average Wall Street Analysts’ Rating on CAE is Buy, wherein 7 out of 12 analysts see the stock as such. The SA Quant Rating completely differs with a Sell rating, with a D- factor grade for Momentum and C- for Valuation YTD, CAE has shed -39.26%.
Mercury Systems (MRCY) -36.56%. The Andover, Mass.-based company’s stock fell in all three months of Q3. The aero/defense product maker’s shares took a significant hit in August after its FQ4 results missed analysts estimates. YTD, MRCY has declined -26.26%. The SA Quant Rating on the stock is Sell, with an A+ score for Growth and D+ for Profitability. The average Wall Street Analysts’ Rating differs with a Buy rating, wherein 3 out of 9 analysts see the stock as Strong Buy.
FedEx (FDX) -33.60%. The Memphis, Tenn.-based company’s stock slumped the most in September (during Q3) after preliminary FQ1 results, wherein the freight transport provider also withdrew its FY23 earnings guidance. During full results CEO Raj Subramaniam highlighted cost-saving initiatives and pricing actions which are expected to save $2.2B to 2.7B. YTD, the stock has declined -42.60%. The average Wall Street Analysts’ Rating on FDX is Buy, wherein 10 out of 30 analysts see it as Strong Buy. The SA Quant Rating differs with a Hold rating, with a factor grade of D for Momentum and B for Valuation.