Top Performing Stocks As the Market Indices Decline (SMTC, PAAS, CPNG)

Over the last month, the SPDR S&P 500 ETF (SPY) is down 4.31% and the QQQ Trust (QQQ) which tracks the Nasdaq 100 index is down 6.12%. Yet some stocks are holding up very well, and even moving strongly to upside.

Cory Mitchell, an analyst with Trading.biz said “Watch for stocks that hold up well while the major indices are declining. Most stocks move in the direction of the indices, so when a stock has enough buying interest that it can hold or move higher while indices are dropping, that is often a good sign.

The buying interest is enough to buoy the stock under the downward pressure of widespread selling. When that wide-spread selling dissipates, and the indices start rising again, these stocks often remain leading performers.”

Each on the list below has a market capitalization of at least $2 billion, a price over $5, and trades an average of at least one million shares per day. Stocks with pending buyouts have been ignored.

SEMTECH CORP (SMTC)

• Semtech is in the semiconductor industry and is up 39% over the last month and 101% in the last six months.
• Yearly earnings per share have been erratic and the company lost money in 2023. Analysts project a return to profitability over the next few years.
• SMTC revenue has been in an uptrend for more than a decade.
• The stock had fallen 86% between late 2021 and 2023, so the recent rally may just be a bounce from oversold conditions.

PAN AMERICAN SILVER CORP (PAAS)

• PAAS is a gold and silver miner. The stock is benefiting from the recent rise in gold and silver prices.
• It is up 30% in the last month but only 20% over the last six months.
• The company lost money in 2022 and 2023 but analysts project profitable years in 2024 and 2025
• The price is just starting to recover from a multi-year decline which saw the price fall 67% from a 2020 high point.

COUPANG INC. (CPNG)

• Coupang is an e-commerce platform, which some call the “Amazon of South Korea”.
• The stock is higher by 22% in the last month and 27% in the last six months.
• Since its initial public offering in 2021, the company’s revenue has grown each year, as have earnings, moving into profit in 2023. Those profits are expected to be less in 2024 and 2025 than they were in 2023, according to industry analysts.
• After the IPO the stock sank 86% and moved mostly sideways between mid-2022 and early 2024. Recently it has attempted to break out to the upside.

The following chart shows all three stocks over the last year.

Interestingly, all these stocks are recovering from big declines. This can be a recipe for big profits, especially if the company can generate strong earnings going forward which helps fuel the stock price higher.

There are no guarantees that these stocks will continue to perform well in the future, but they have been performing well recently while the stock market indices have declined.

That’s a positive. Ultimately, a stock needs to continue to act well—move higher and recover from pullbacks—to warrant holding it.

Manage risk and have an exit plan for a stock that is no longer acting strong. Also, consider where and how to exit if the stock price rises after entry. The exit point will depend on factors such as the time horizon of the trade, goals, and risk taken initially.

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