We all have our benchmark stocks on a given day. Yesterday, I was watching five key stocks and what management had to say. The answer: Stellar across the board. "Five for five" is the only way to describe it.
The "Big Five" for yesterday -- homebuilder Toll Brothers (TOL) , retailers AutoZone (AZO) and Francesca's (FRAN) , restaurant/bar chain Dave & Buster's (PLAY) and Western Digital (WDC) , the disk-drive and flash-memory company,
AutoZone, the gigantic chain of auto-parts stores, recorded a quarter that was much better than feared -- 1.6% U.S. same-store sales growth vs. 1% expected and a nice return to growth. CEO Bill Rhodes noted that "with continue aging of the car population, we continue to be optimistic regarding trends for our industry in both 'Do It Yourself' and 'Do It for Me.'"
He continued: "As new-vehicle unit sales are reaching all-time highs and gas prices on average are down year over year, miles driven continue to increase [and] the lower-end customer benefits the most from lower gas prices to income. The trend is encouraging for us."
How consistent was the performance? "We did experience positive comps in every month" of the quarter, Rhodes said.
It was another "put your money where your mouth is quarter," as the company continues to buy back stock. Its buyback remains the best of all of the companies that I follow. AZO's total shares outstanding have shrunk from 49 million to about 28 million just this past decade.
Dave & Busters also blew the numbers away. CEO Stephen King said comp stores were up a staggering 5.4% and "continue to perform exceedingly well, and we expanded gross margins." Just a remarkable quarter, as the company experienced significant operating leverage.
Also, all regions were strong including the once-lagging Texas area. Could this be the return of strength with oil decisively higher? I think so. It's important to note that walk-in sales grew at 5.7%. That bodes well for all the once-lagging restaurant stocks.
Francesca's, a woman's fashion boutique, also performed shockingly well. As the company said on the earnings call: "We are very pleased with both our sales and earnings performance for the third quarter, as we exceeded our previous guidance."
This was a genuine upside surprise, and perhaps most surprising was this statement: "What was interesting within the quarter was that mall-based stores outperformed non-mall based stores." Now that's something. Jewelry was the standout of the merchandise sold.
You couple that with bullish comments made recently on Mad Money by CEO Manny Chirico of PVH Corp. (PVH) -- namely that the post-election period was incredibly strong -- as well as very positive read-throughs by both JC Penney (JCP) and Ulta Salon (ULTA) and you have a very strong retail narrative heading into the holidays.
Toll Brothers? Extraordinary. Homebuilding delivery units jumped 29% in dollars and 22% in units. Net signed contracts rose 17%. Non-binding deposits for this quarter were up 10%, a great sign for the future.
The company saw double-digit increases in backlog, and as founder and Executive Chairman Bob Toll said: "With the employment picture and the stock market on positive trajectories, interest rates still extremely attractive, significant pent-up demand and a dearth of supply in many markets, we believe the new-home market will remain on its current course of steady growth." Toll has been public for 30 years now -- hmm, I remember the day it IPO'd -- and, historically, it has not bought stock. But because the company feels so strongly about how inexpensive its stock is, it has bought back 8% of TOL shares in this year alone.
Amazingly, I saved the best for last. After the bell, Western Digital pre-announced a much-better-than-expected quarter. Demand for both hard drives and flash-based products was so strong across all customer categories, driven by cloud and mobile applications as well as better than expected PC trends.
When you couple that with what Micron Technology (MU) is talking about right now -- tightness in supply for DRAMs -- you get a rosy picture for tech coming into the crucial holiday season.
Yep, five for five ... and a reminder that perhaps things are indeed better than we have been thinking -- and in each case, getting stronger as we entered the fourth quarter.
