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Investors Should Look at These 2 Big Thursday Winners

Wall Street has been somewhat nervous this week as worries about the ongoing pandemic don’t seem to be easing. As a result, the stock market has given back some of the ground it had gained en route to its recent record highs.

The Nasdaq Composite (NASDAQINDEX:^IXIC) held up the best on Thursday, while the S&P 500 (SNPINDEX:^GSPC) and Dow Jones Industrial Average (DJINDICES:^DJI) saw slightly larger drops on a percentage basis.

Index

Percentage Change

Point Change

Dow Jones Industrials

(0.43%)

(152)

S&P 500

(0.46%)

(21)

Nasdaq Composite

(0.25%)

(38)

Data source: Yahoo! Finance.

In that context, the huge winners of the day were especially noteworthy. Gevo (NASDAQ:GEVO) and LoveSac (NASDAQ:LOVE) aren’t exactly household names, but they’re wowing Wall Street in a way that’s making a lot of people take notice.

Gevo makes a deal

Shares of Gevo soared 37% on Thursday. The sustainable energy specialist made an agreement that could dramatically enhance its long-term business prospects.

Gevo and oil giant Chevron (NYSE:CVX) announced that they had signed a letter of intent to invest jointly in building one or more facilities to produce sustainable aviation fuel from corn. According to the companies, the facilities would also be able to produce some desirable byproducts, including corn oil and various proteins likely for use in animal feed.

Fuel truck near a private jet.g.foolcdn.com/image/?url=https%3A//g.foolcdn.com/editorial/images/642586/jet-fuel-gettyimages-92376624.jpg&w=1000&op=resize 1000w, g.foolcdn.com/image/?url=https%3A//g.foolcdn.com/editorial/images/642586/jet-fuel-gettyimages-92376624.jpg&w=2000&op=resize 2000w”/>

Image source: Getty Images.

Aviation has a large carbon footprint, and many environmental advocates have targeted the airline industry as a place to encourage sustainability efforts. Moreover, under the collaboration, Chevron anticipates also having the venture generate renewable blending components that it can add to regular automotive gasoline in order to reduce its carbon intensity as well.

Chevron will get the right to take 150 million gallons of the facility’s production for its customers, but for Gevo, one benefit is the spotlight the deal puts on its sustainable energy technology. Investors are hopeful that this is just the beginning for Gevo in its mission to make energy users more carbon-friendly.

Feeling the love

Meanwhile, shares of Lovesac finished the day up 24%. The home furnishings specialist showed strength in its latest financials that hinted at a long growth runway ahead.

Lovesac’s second-quarter results were extremely good. Net sales jumped 65% to top $100 million. Year-over-year comps were up almost 40%, even following a 72% jump the previous year. Internet sales did fall by 36% from year-ago levels, but Lovesac more than made up for that by nearly quadrupling its comparable showroom sales. Gross margin expanded almost 7.5 percentage points to 57.6%. Even better, the company reversed its year-ago losses and turned in earnings of $0.52 per share — higher than most analysts following the stock had anticipated.

Lovesac attributed its strong performance to a number of factors. The retailer was able to reduce its use of promotional discounting, which contributed directly to the margin improvement. Moreover, it has been able to negotiate with suppliers to deal with the impact of tariffs while also shifting its supply chain away from China and toward countries such as Vietnam, Malaysia, and Indonesia.

Best of all, Lovesac says its success has continued into the third quarter. That’s good news for investors, and it shows that the home furnishings company might be able to sustain its momentum much further into the future than many had expected.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

These 2 Stocks Just Dropped After Hours

The stock market kept rising on Tuesday, with modest gains adding to Monday’s rally. The S&P 500 (SNPINDEX:^GSPC) joined the Nasdaq Composite (NASDAQINDEX:^IXIC) at record levels, while the Dow Jones Industrial Average (DJINDICES:^DJI) had to settle for the smallest gain of the major indexes.

Index

Percentage Change

Point Change

Dow

+0.09%

+30

S&P 500

+0.15%

+7

Nasdaq Composite

+0.52%

+77

Data source: Yahoo! Finance.

However, there were some hints of discontentment in the after-hours session, as a couple of retail stocks reported disappointing earnings results. Both Nordstrom (NYSE:JWN) and Urban Outfitters (NASDAQ:URBN) lost ground, and what they said could cast a shadow over the idea that the vaccination-led economic recovery will inevitably produce strength across the retail industry.

Nordstrom can’t satisfy shareholders

Shares of Nordstrom fell more than 7% on Tuesday afternoon after the close of the regular session. The department store retailer’s second-quarter financial report had some positive points, but investors simply weren’t content with the progress Nordstrom has been making lately.

Three people trying on hats at a store.g.foolcdn.com/image/?url=https%3A//g.foolcdn.com/editorial/images/640597/shopping-3-people-gettyimages-bldhs040056tgs.jpg&w=1000&op=resize 1000w, g.foolcdn.com/image/?url=https%3A//g.foolcdn.com/editorial/images/640597/shopping-3-people-gettyimages-bldhs040056tgs.jpg&w=2000&op=resize 2000w”/>

Image source: Getty Images.

Nordstrom’s numbers reflected the challenges of pandemic-related lockdowns in the year-ago period, but they also signaled some failures to recover fully. Net sales more than doubled year over year, but they were down 6% from the same period in 2019 before the pandemic. The company had some success with its annual anniversary event, with sales rising 1% from 2019 levels, taking calendar effects into account.

CEO Erik Nordstrom attributed the gains to the strength of its namesake high-end stores and its Nordstrom Rack off-price store concept. In particular, the company is trying to broaden the reach of Nordstrom Rack by expanding price points, which helped lead to improving sales compared to the first quarter of 2021. Meanwhile, ongoing progress in boosting digital sales pointed to the wisdom of Nordstrom’s investments in its digital channel.

Even with a raised outlook calling for 35% revenue growth for 2021, though, shareholders wanted to see Nordstrom take greater advantage of the rebound. With the stock still significantly below its all-time highs from the mid-2010s, the retailer has a long way to go to fully satisfy its investors.

Urban Outfitters gives back gains

Urban Outfitters also saw losses in the after-hours session, although in its case, it merely gave back gains from earlier in the day. Urban Outfitters finished regular trading up more than 5%, but then fell almost 5% following its earnings release.

The early gains came from news that Urban Outfitters would launch a resale marketplace for apparel and accessories. Nuuly Thrift will tap into the heavy demand among consumers for secondhand goods, and Urban Outfitters investors especially liked the idea given the company’s efforts to tap into fashion trends in a distinctive way.

Urban Outfitters also seemed to do well in its financial results. Compared with pre-pandemic levels two years ago, revenue jumped more than 20%, with digital channel growth easily offsetting negative retail-store sales comparisons because of lingering impacts of the pandemic. The Free People store concept did the best with 53% sales gains, followed by 20% from the namesake brand and 14% for Anthropologie.

Again, though, the drop in the stock reflects the extremely high expectations shareholders have for retailers to bounce back convincingly. In that light, even the solid results from Urban Outfitters and Nordstrom in recent periods don’t appear to have been enough, and that could cause problems for the entire retail industry if conditions don’t improve more quickly.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.