What Happened?

A number of stocks jumped in the morning session after an in-line inflation report fueled hopes for interest rate cuts and the U.S. and China agreed to extend their tariff truce. The Consumer Price Index (CPI), a key measure of inflation, came in largely as expected, holding steady at 2.7% year-over-year. This reading boosted investor optimism that the Federal Reserve will have room to lower interest rates at its next meeting, which could reduce borrowing costs for companies and consumers. 

Adding to the positive sentiment, the U.S. and China extended their tariff truce for another 90 days. This development alleviates concerns about renewed trade tensions, which is a significant relief for industrial companies reliant on global supply chains and international sales. Together, these events create a favorable outlook for economic growth, benefiting cyclical sectors like industrials.

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:

• Engineered Components and Systems company NN (NASDAQ: NNBR) jumped 4.6%. Is now the time to buy NN? Access our full analysis report here, it’s free.
• Professional Tools and Equipment company Stanley Black & Decker (NYSE: SWK) jumped 3.6%. Is now the time to buy Stanley Black & Decker? Access our full analysis report here, it’s free.
• Heavy Transportation Equipment company Commercial Vehicle Group (NASDAQ: CVGI) jumped 3.6%. Is now the time to buy Commercial Vehicle Group? Access our full analysis report here, it’s free.
• Electrical Systems company Whirlpool (NYSE: WHR) jumped 4%. Is now the time to buy Whirlpool? Access our full analysis report here, it’s free.
• Home Builders company Champion Homes (NYSE: SKY) jumped 4.6%. Is now the time to buy Champion Homes? Access our full analysis report here, it’s free.

Zooming In On NN (NNBR)

NN’s shares are extremely volatile and have had 57 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 7 days ago when the stock gained 3.2% on the news that B. Riley initiated coverage on the stock with a 'Buy' rating and a $4.00 price target, signaling significant potential upside. The research firm described the industrial parts maker as a 'best-in-class developer' of complex metal components. The new $4.00 price target represented a potential upside of more than 100% from the stock's prior closing price. In its report, B. Riley noted that while past management struggled with supply chain issues, the company’s reputation for quality was 'unquestioned and well-deserved.' The positive analyst action came as investors also looked ahead to the company's second-quarter earnings report, which was scheduled for release later in the week.

NN is down 27.2% since the beginning of the year, and at $2.30 per share, it is trading 45.9% below its 52-week high of $4.25 from December 2024. Investors who bought $1,000 worth of NN’s shares 5 years ago would now be looking at an investment worth $328.71.

Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.