The top three stocks on the S&P 500 last week: TGT, ENPH, CTLT

After a late summer into an early fall swoon, things have turned up in November, as last week was the third consecutive week of gains for the S&P 500. The benchmark was up 2.2% for the week to 4,514 as of the market close on Friday. Year to date, the S&P is up 17.6% as of Monday’s opening bell, and it has gained 7.6% since Nov. 1.

The other two major market indexes were also higher last week, as the Nasdaq Composite gained 2.4% and the Dow Jones Industrial Average jumped 1.9%.

The primary catalyst last week was the Consumer Price Index, which fell to 3.2% in October, lower than economists expected and down from 3.7% in September. The market rallied in hopes that this decline would signal the end of interest-rate hikes, given that inflation continues to close in on the Fed’s target range of 2%.

The October retail sales report also came out last week, and while sales ticked down slightly, it did not seem to hurt retail stocks, as many of the big names posted solid earnings last week. The best of the bunch was Target (NYSE: TGT), which was also the best-performing stock on the S&P 500 last week.

1 . Target, up 19.9%

Target soared 19.9% last week after posting strong third-quarter earnings on Wednesday. It wasn’t that sales were through the roof in the quarter; in fact, they were down 4.3% overall, while total revenue fell 4.2% year over year. Nonetheless, Target’s total sales were considerably better than expected.

However, the big story for Target was its net income, which climbed 36% to $971 million, or $2.10 per share. This obliterated the consensus estimate of $1.47 per share due to strong inventory management and a drop in expenses. The retailer’s net interest expenses fell 14% year over year, while its inventory was 14% lower than a year ago.

When inventory is well-managed, it typically leads to lower costs and provides a net earnings boost for retailers. The improved efficiency resulted in Target’s operating income climbing 26% yer over year in the quarter, and its operating income margin rose from 3.9% a year ago to 5.2% in the most recent quarter.

Target stock was down by about 13.2% year to date to $129 per share as of Monday morning. It has a consensus price target of $145 per share.

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2. Enphase Energy, up 19.1%

Enphase Energy (NASDAQ: ENPH) also had a great week, with its stock price surging 19.1%. This clean-energy company makes microinverters for solar panels, enabling the conversion of direct current (DC) energy into alternating current (AC) energy so that it can be connected to the grid. The company also produces battery storage units and systems to store solar energy.

The major catalyst for Enphase was likely the announcement by the U.S. Department of Energy that it was allocating $3.5 billion from the Bipartisan Infrastructure Law to increase the domestic production of advanced batteries and battery materials. This is certainly a boost for battery manufacturers like Enphase.

In addition, the firm rolled out a new microinverter product in North America last Thursday, its IQ8 Commercial Microinverters. They are designed for the small commercial market in North America, marking an expansion for Enphase as it has primarily served residential customers.

Even with the bump last week, Enphase Energy is still down 64% year to date, trading at around $95 per share, although consensus estimates call for a price target of $115 per share.

3. Catalent, up 18.8%

The third big winner was Catalent Inc. (NYSE: CTLT), which jumped 18.8% last week. The clear catalyst for the medical device and product manufacturer was its fiscal first-quarter earnings, which it posted on Wednesday.

While revenue was down 4% year over year to $982 million, the company beat estimates of $939 million. Catalent also had a $714 million net loss, mainly due to a $700 million goodwill impairment associated with the recent acquisitions in its Biomodalities and Consumer Health reporting units. The adjusted net loss was $19 million, compared to a $61 million net gain in the first quarter of last year.

The bigger driver that fueled Catalent’s rise was its outlook. It maintained its full-year fiscal-2024 revenue guidance of between $4.3 and $4.5 billion, up from $4.28 billion in FY 2023, and adjusted EBITDA guidance of $680 million to $760 million, compared to $714 million in the last fiscal year.

However, surging demand for its pre-filled syringes is expected to be a high-growth area over the long term due to the growth in GLP-1 (glucose-like peptide-1) drugs for weight loss and lowering blood-sugar levels.

“Our exposure to the GLP-1 opportunity is rapidly growing,” CEO Alessandro Maselli said on the earnings call. “We are now forecasting that a larger majority of our current and future pre-filled syringe capacity coming online in fiscal ’24 through fiscal ’26 is expected to be booked soon in support of this exciting category of products, confirming our position as a leading CDMO in this space globally.”

Catalent is down by about 10.6% YTD to around $40 per share, with a price target of $48.

This week is a short one due to the Thanksgiving holiday, but the market will be tuned into the release of tech giant Nvidia’s (NASDAQ: NVDA) earnings on Tuesday, alongside retailers Lowe’s (NYSE: LOW) and Best Buy (NYSE: BBY).