What Happened?
A number of stocks jumped in the afternoon session after the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Electrical Systems company Sanmina (NASDAQ: SANM) jumped 4%. Is now the time to buy Sanmina? Access our full analysis report here, it’s free.
- Maintenance and Repair Distributors company MSC Industrial (NYSE: MSM) jumped 4.3%. Is now the time to buy MSC Industrial? Access our full analysis report here, it’s free.
- HVAC and Water Systems company Zurn Elkay (NYSE: ZWS) jumped 4.2%. Is now the time to buy Zurn Elkay? Access our full analysis report here, it’s free.
- General Industrial Machinery company Albany (NYSE: AIN) jumped 5.1%. Is now the time to buy Albany? Access our full analysis report here, it’s free.
- Construction and Maintenance Services company Matrix Service (NASDAQ: MTRX) jumped 4.2%. Is now the time to buy Matrix Service? Access our full analysis report here, it’s free.
Zooming In On Albany (AIN)
Albany’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 22 days ago when the stock dropped 26.2% on the news that the company reported disappointing second-quarter financial results, including a significant earnings miss. The industrial goods manufacturer posted earnings per share of $0.57, which fell well short of the $0.77 analysts expected. The report also detailed a 6.2% year-over-year decline in revenue and a 13.2% drop in gross profit, driven by lower profitability in its Aerospace Engineered Composites division. Operating income was nearly cut in half compared to the same period last year. Following the weak results, analysts at Baird downgraded the stock to Neutral, citing concerns over the future profitability of both the company's aerospace and machine clothing businesses. The negative news sent the stock to a new 52-week low.
Albany is down 17.5% since the beginning of the year, and at $65.34 per share, it is trading 30.6% below its 52-week high of $94.16 from August 2024. Investors who bought $1,000 worth of Albany’s shares 5 years ago would now be looking at an investment worth $1,286.
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