Following the best first half of the year for stocks in roughly the past decade and a half, the S&P 500 powered higher on the first trading day of the third quarter thanks to a better-than-expected ISM report. The ISM reading of 50.9 came in higher than the Street had expected and signals faster-than-expected manufacturing activity in the United States. Any figure of 50 signals expansion, which would speak to the slow but steady nature of this recovery.
When all was said and done, the S&P 500 trudged higher by 8.68 points (0.54%) to finish at 1,614.96. The S&P 500 may have had a great start to the second half, but the following three stocks really rocketed to the upside.
Leading the charge is cable operator Cablevision Systems Corporation (NYSE:CVC) again found itself in the spotlight, up 9.6%, following the completion of its sale of Optimum West to Charter Communications, Inc. (NASDAQ:CHTR) for $1.625 billion. While shareholders are likely to be pleased seeing this deal completed, shares are really ramping up in expectation that Charter Communications, Inc. (NASDAQ:CHTR) may make a bid for Cablevision Systems Corporation (NYSE:CVC). Rumors have been circulating for a week based on a report from Bloomberg News that Charter Communications, Inc. (NASDAQ:CHTR) may look to make a bid for Time Warner Cable Inc (NYSE:TWC) or Cablevision Systems Corporation (NYSE:CVC). My stance remains not to chase rumors higher, so I’d suggest watching Cablevision Systems Corporation (NYSE:CVC) from the sidelines.
Following closely was big-box electronics retailer Best Buy Co., Inc. (NYSE:BBY), which jumped 8.8% after research firm Credit Suisse resumed coverage on the company with an “outperform” rating and a $40 price target, implying 46% upside from Friday’s close. Credit Suisse analyst Gary Balter commented that Best Buy Co., Inc. (NYSE:BBY) is optimally using its price-matching policy to its advantage, and that it could ultimately lead to $5 in EPS. Although I would exercise caution chasing any stock higher based on the comments of an analyst as price movements based on upgrades and downgrades are often fleeting, I do agree wholeheartedly with Balter. With more states adopting a bill which requires the collection of Internet sales tax — removing Amazon.com, Inc. (NASDAQ:AMZN)‘s biggest pricing advantage — Best Buy Co., Inc. (NYSE:BBY) looks like it could return to its old form.
Finally, video streaming company Netflix, Inc. (NASDAQ:NFLX) advanced 6.3% after signing a multi-year streaming deal with Twentieth Century Fox for TV series New Girl. Netflix, Inc. (NASDAQ:NFLX) is putting nearly all of its chips on future streaming content deals and is counting on subscription growth in overseas markets to drive its bottom line profits. However, I’m not nearly as convinced that Netflix, Inc. (NASDAQ:NFLX) is an intriguing value with the company valued at 73 times forward earnings, still burning through high-margin DVD subscribers, and facing the potential for increased competition from Amazon.com, Inc. (NASDAQ:AMZN) and Coinstar, Inc. (NASDAQ:CSTR).
The article Today’s 3 Best Stocks originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends, Amazon.com and Netflix.
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