Stock Market

With the warmer weather season coming to an end, I wanted to take a look back at some of the hottest summer stock winners of the last few months. While some stocks didn’t have the best quarter (thanks to earrings and a host of other blistering issues), many soared. In fact, let’s take a look at the success stories.

Summer Stock Winners: Warner Bros. Discovery (WBD)

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Hollywood strike or not, entertainment giant Warner Bros. Discovery (NASDAQ:WBD) hit a home run this summer with the release of the “Barbie” movie. Having grossed $1.34 billion at the worldwide box office, and counting, Barbie has become the the highest-grossing global release in the studio’s 100-year history. Barbie is also the highest-grossing movie of 2023 so far. A smash hit with audiences and critics, Barbie also helped to set the cultural tone for the summer, with people everywhere dressing in pink.

For Warner Bros. Discovery, Barbie is a welcome relief at an important time for the studio. There is, of course, the strike, which hasn’t been helpful. And we have to remember that a difficult merger with the Discovery Channel saddled it with nearly $50 billion of debt. More recently, Warner Bros. Discovery has had to push back the release of another potential hit film, “Dune: Part Two,” due to the Hollywood strike.

While Warner Bros. Discovery continues to have its fair share of problems, the company has been a clear winner this summer. WBD stock is up 37% so far this year.

American Airlines (AAL)

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American Airlines (NASDAQ:AAL), the world’s largest international carrier, is still recovering from the ravages of the COVID-19 pandemic when its airplanes were grounded. However, the company is moving in the right direction again, thanks to a surge in global travel this summer.  The carrier reported second-quarter financial results that crushed forecasts across the board. It also raised its forward guidance for the current third quarter, which includes the summer months of June through August.

In its second quarter, the company posted earnings per share (EPS) of $1.92, as compared to expectations of $1.59. Revenues came in at $14.06 billion compared to expectations of $13.74 billion. Plus, it lifted its forward guidance for the full year. All thanks to its expectations that the 2023 travel boom will continue. AAL stock has gained 16% this year, with the Transportation Security Administration (TSA) reporting a record-high summer of airline travel.

Summer Stock Winners: Nvidia (NVDA)

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It’s hard to talk about summer 2023, or the stock market in general, without mentioning Nvidia (NASDAQ:NVDA). The company’s Q2 earnings in August were viewed as a bellwether for global markets. Fortunately, Nvidia didn’t disappoint, posting financial results that blew away even the most optimistic forecasts. Nvidia is definitely a stock that dominated the summer of 23.

In Q2, Nvidia’s revenues swelled to a record $13.5 billion, up 101% from a year ago. Net income (profit) hit a record $6.2 billion which was more than nine times higher than a year earlier. Plus, gross profit margins were above 70% for the first time. As for Q3,  Nvidia is projecting revenue of $16 billion, which would be a 170% year-over-year increase. No wonder NVDA stock is up 245% this year and leading all stocks in the S&P 500 index.

Berkshire Hathaway (BRK-A/BRK-B)

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Legendary investor Warren Buffett is 93 years old and shows no signs of slowing down. Even better, the Oracle of Omaha’s holding company, Berkshire Hathaway (NYSE:BRK-A/NYSE:BRK-B) is closing out the summer with its share price sitting at an all-time high. Not only did Berkshire announce exceptionally strong Q2 financial results, but it was recently revealed that Buffett made brilliant stock picks in recent months.

Berkshire reported that its operating earnings rose 6.6% year-over-year to $10.04 billion in Q2. The company also reported that its cash holdings reached a record high of about $150 billion. Beyond the stellar earnings, a recent regulatory filing showed the firm bought stock in three U.S. homebuilders heading into the summer. That included DR Horton (NYSE:DHI), Lennar (NYSE:LEN) and NVR (NYSE:NVR).

Summer Stock Winners: Abercrombie & Fitch (ANF)

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Most retailers reported dismal second-quarter numbers in August with executives whining on earnings calls about in-store theft and slumping consumer demand. That didn’t happen with clothing retailer Abercrombie & Fitch (NYSE:ANF), though. Instead, ANF saw its stock rise 23% after it issued a Q2 print that left both analysts and investors gob-smacked. Among retailers, ANF stock was the clear winner of summer 2023.

The company reported EPS of $1.10, which was a staggering 547% higher than analyst expectations. Q2 revenue totaled $935 million versus $842 million that had been forecast. Equally impressive, Abercrombie & Fitch said it now anticipates that its net sales will rise 10% for all of this year, up from a previous growth estimate of just 2%. Company CEO Fran Horowitz said that Abercrombie & Fitch has evolved to become a “lifestyle brand.

ANF  gained 250% over the last 12 months, including a 122% increase this year, beating the performance of most tech stocks.

McDonald’s (MCD)

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McDonald’s (NYSE:MCD) store traffic and sales have been on an upswing. All thanks in part to the resurrection of the popular children’s character Grimace and the introduction of  Grimace-themed Happy Meal. McDonald’s is also benefitting from the fact that its stores are again operating at full capacity — following the pandemic. Rebounding sales in China have also been a catalyst for the company and its stock.

McDonald’s reported Q2 EPS of $3.17, as compared to expectations of $2.79. Revenue in the quarter came in at $6.50 billion, as compared to the $6.27 billion forecast. Global same-store sales rose 11.7%, beating expectations of 9.2% growth. In the U.S., same-store sales jumped 10% in the quarter. And while China’s economy is cooling, same-store sales growth in the nation of 1.4 billion people jumped 14% from a year earlier. MCD stock has risen 12% over the last 12 months and is up 75% through five years.

Amazon (AMZN)

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E-commerce giant Amazon (NASDAQ:AMZN) appears to have gotten its mojo back. In fact, the AMZN stock popped 10% in early August after the company reported strong profits and raised its guidance, reversing multiple quarters of underperformance. Amazon’s EPS for Q2 totaled 65 cents, which was 85% higher than the 35 cents that analysts had penciled in. Revenue came in at $134.4 billion, as compared to $131.5 billion expectations.

Additionally, Amazon beat forecasts on several other key metrics for its business, including Amazon Web Services (AWS), which earned $22.1 billion, which was greater than the $21.8 billion expected. The latest result was Amazon’s strongest earnings print since Q4 2020. It took a while, but Amazon has managed to right its ship through aggressive cost cuts that included the biggest round of layoffs in its history.

On the date of publication, Joel Baglole held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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