The S & P 500 last week wrapped up the third quarter, falling more than 5%. It was the third consecutive quarter of declines for the index, marking the longest losing streak since 2008. Stocks and commodities have since broadly rallied in the first days of the fourth quarter . But after yet another troublesome quarter in the books, we thought it would again be helpful to look back and highlight what went right — and wrong — in the three months ended Sept. 30. Here’s a snapshot of the best and worst performers in the Investing Club’s 34-stock portfolio for the third quarter, starting with our four top performers. Top performers Taking the crown was TJX Companies (TJX), with a strong gain of about 11.4% in the third quarter. We didn’t own TJX for the totality of the quarter, but it was still a relative outperformer from the time of our initiation. Since our first buy on Aug. 24 , shares of the off-price retailer fell about 3.6%, versus a 13.4% slide in the S & P 500. We used that decline to scale deeper into our TJX position a few times. The retail sector is going through an apparel inventory glut right now and is frantically working to right-size positions through heavy markdowns, liquidations, and by cancelling orders. This has created a unique moment for off-price chains, including TJX’s flagship chain TJ Maxx, as it gives them an opportunity to pick up all sorts of quality merchandise for next to nothing. At the same time, gasoline prices in the U.S. hit a high in June before falling nearly every day in the third quarter. This much needed relief at the pump added support to consumer stocks, with the thought being that people would have a little more breathing room in their discretionary budgets than when gasoline averaged $5 a gallon. The runner up was Wynn Resorts (WYNN), which climbed 10.6% higher in the quarter. Shares of this casino operator made a big push near the end of the quarter, after it was announced that tour groups from mainland China would be allowed back into gambling hub Macao in November. The news was greeted positively by investors, as it was the first real sign that Beijing was moderating its strict zero-Covid restrictions. Starbucks (SBUX) came in third place, jumping 10.3% over the quarter. Like TJX, we didn’t own SBUX for the full quarter, but it was also a relative outperformer from our first buy. We initiated a position in the coffee retailer on Aug. 22, and shares fell less than 1%, compared to a 13.3% drop in the S & P 500 for the rest of the quarter. The stock was a steady riser throughout the quarter thanks to a great earnings report, in which the company topped expectations on every line and issued better than expected guidance for the next quarter. But the real catalyst in the quarter was the company’s mid-September investor event, where management outlined its reinvention plan and provided medium-term financial targets . The event was nearly universally praised by Wall Street . Fourth was Devon Energy (DVN), which gained 9.1% in the quarter and was the top performing energy stock in our portfolio. The solid gains in Devon came despite a subdued period for energy stocks, weighed down by falling crude prices. West Texas Intermediate (WTI) – the U.S. oil benchmark – dropped to around $80 a barrel by the end of September, falling more than 17% since the start of the quarter. One thing that separated Devon from other U.S.-based oil-and-gas producers was its deal-making. The company announced another immediately accretive bolt-on transaction in the quarter, this time purchasing Validus Energy, an Eagle Ford operator, for a total cash consideration of $1.8 billion. Devon announced the purchase of RimRock Oil & Gas, for $865 million, in the second quarter. What stood out about the Validus deal was that Devon said the outlook for its variable dividend increased by up to 10% on a per-share basis at strip pricing. The incremental cash flow also provided more firepower to execute on its share repurchase program. Looking back at our second quarter’s top performers , they were filled with health-care and consumer staple stocks — companies with very little economic sensitivity that can grow in a slowdown. This time it was quite different, with discretionary stocks leading the pack and an oil company in fourth. If anything, this goes to show the difficulty of predicting what sector or group of stocks will outperform from one quarter to the next. It’s why we always strive to stay diversified and invest in high-quality companies across different industries. Worst performers The worst performer for the club was Halliburton (HAL), which fell 21.5% in the third quarter. Shares slumped as WTI plummeted. As an oilfield services company that makes its money when oil-and-gas exploration companies increase spending on drilling, the decline in the price of crude oil made public and private drillers less incentivized to increase capacity. The weak performance came despite a better-than-expected second quarter earnings report and commentary that still has us encouraged about expanding margins in the new upcycle. Second from the bottom was Nvidia (NVDA), which declined about 19.9% amid the continued rout in semiconductor stocks. It was another tough quarter, as the chip maker pre-announced disappointing second-quarter results — for the three months ending July 31 — in early August due to the gaming chip glut. But, of course, the issues facing the gaming market are expected to take multiple quarters to fix, leading management to provide a much weaker view for its fiscal third quarter, which ends Oct. 31, than what was anticipated. And to add insult to injury, the U.S. government announced restrictions on the sale of Nvidia’s artificial intelligence graphics processing units (GPU) to Chinese customers with military end markets. The company said this restriction put up to $400 million of revenue at risk for the fiscal third quarter. Despite the numerous headwinds, Nvidia’s leadership in its data center business is unrivaled, and the launch of its new gaming chip could be what is needed to restart the gaming cycle. Bausch Health Companies (BHC) was our third worst performing stock, falling about 17.6%. Shares of this specialty pharmaceutical company were hit hard in late July after a surprise ruling from the U.S. District Court of Delaware invalidated some of the company’s Xifaxan patents. This decision, which is being appealed by Bausch, means a generic Xifaxan, which treats irritable bowel syndrome, could enter the market in 2025. Xifaxan is one of the most important franchises at legacy Bausch Health. Still, in a bright spot of news, the company in late September completed a debt exchange offer that reduced its total debt load by about $2.5 billion. The fourth worst stock was Advanced Micro Devices (AMD), which declined about 17.1% in the quarter. The chip maker’s quarterly results were met with mixed reviews, as the company reiterated its full year guidance but lowered the outlook for its PC business for the rest of the year. AMD was able to maintain its outlook because strength in its data center and embedded businesses are expected to offset the PC division. Still, broader concerns about the health of the semiconductor industry overpowered the stock in the quarter. Such worries include the U.S. government restricting the sale of artificial intelligence chips to customers in China with military end markets (something AMD said was immaterial to its business) and the sustainability of data center demand. Importantly, we think AMD will continue to gain server market share on competitor Intel for many more years. That’s a big reason why we stick by our small position. Semiconductor stocks remained one of the most difficult corners of the market to invest in, as their lofty valuations — which needed to come down as interest rates rose — and weakening fundamentals have forced investors to debate whether their long-term potential is worth the short-term pain. Of our four semis, NVDA and AMD are repeat offenders on our quarterly underperforming list, but we can take some solace in the fact that we made aggressive sales in both in early April . (Jim Cramer’s Charitable Trust is long TJX, WYNN, SBUX, DVN, HAL, NVDA, BHC, AMD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Michael Nagle | Bloomberg | Getty Images
The S&P 500 last week wrapped up the third quarter, falling more than 5%. It was the third consecutive quarter of declines for the index, marking the longest losing streak since 2008.
Stocks and commodities have since broadly rallied in the first days of the fourth quarter. But after yet another troublesome quarter in the books, we thought it would again be helpful to look back and highlight what went right — and wrong — in the three months ended Sept. 30.
Here’s a snapshot of the best and worst performers in the Investing Club’s 34-stock portfolio for the third quarter, starting with our four top performers.
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