Three stock picks that could possibly be price a bet in July based on standout performance last month
June was a wonderful month for the stock market as all of the most important U.S. indexes posted positive returns.
Corporate earnings remained strong, and while the Fed didn’t act on rates of interest, inflation rates fell, indicating a seamless trend toward the Fed’s goal of two% inflation.
The S&P 500 also finished within the black for the second straight month, returning 3.5% in June. Nonetheless, the Nasdaq Composite was the massive winner, recording certainly one of its best months of the yr with a 6.2% return in June.
The Dow Jones Industrial Average lagged a bit, gaining 1.1% in June, while small caps continued to struggle because the Russell 2000 finished the month down 1.1%.
These were the three top stocks on the S&P 500 in June.
1. Adobe, up 24.9%
Adobe (NASDAQ:ADBE), which produces software for graphic design and photo editing, saw its share price spike in mid-June after the discharge of its fiscal second-quarter earnings.
On June 14, the share price jumped from $459 per share to $525 per share — a 14.4% leap — on a blowout earnings report that smashed estimates. Adobe stock ended the month up 24.9%.
The corporate generated record revenue of $5.3 billion within the quarter, up 10% yr over yr. Meanwhile, its net income skyrocketed 21.5% to $1.6 billion, or $3.50 per share.
“Adobe achieved record revenue of $5.31 billion driven by strong growth across Creative Cloud, Document Cloud and Experience Cloud,” said Shantanu Narayen, chair and CEO of Adobe. “Our highly differentiated approach to AI and modern product delivery are attracting an expanding universe of shoppers and providing more value to existing users.”
Adobe also raised its revenue and earnings targets for its fiscal third quarter and the complete fiscal yr based on expectations for improved macroeconomic and foreign exchange environments.
It was a bounce-back month for Adobe. Even with the strong June performance, the stock is down 5.2% yr to this point.
2. CrowdStrike, up 22%
CrowdStrike Holdings (NASDAQ:CRWD), which develops cybersecurity software, was the second-best performer on the S&P 500 in June, returning 22% for the month. Last month marked the continuation of a powerful yr for CrowdStrike stock, which has returned 50.5% YTD.
June was indeed an eventful month for the corporate because it was added to the S&P 500 on June 24. Nonetheless, the most important catalyst for CrowdStrike was its first-quarter fiscal-2025 earnings report, released on June 4.
Following this blowout earnings report on June 4, CrowdStrike stock jumped from $305 per share to $343 per share the following day and kept rising from there.
One could see why, as CrowdStrike posted a 33% year-over-year increase in revenue to $921 million, while net income skyrocketed from $0.5 million in the identical quarter a yr ago to $43 million in probably the most recent quarter. Net earnings per share climbed to 18 cents per share, from 0 cents in the identical quarter a yr ago.
“Along with our strong top-line performance, financial highlights included record gross margin, significant year-over-year operating leverage, record free money flow of $322 million or 35% of revenue and a rule of 68 on a free money flow basis, showcasing our deal with profitably scaling the business to $10 billion ending ARR (annual recurring revenue) and beyond,” said Burt Podbere, CrowdStrike’s chief financial officer.
CrowdStrike also boosted its revenue and earnings outlook for the fiscal second quarter and full fiscal yr. For the second quarter, it is looking for revenue of $958.3 million to $961.2 million, and for the complete yr, it’s targeting $3.976 billion to $4.01 billion in revenue.
Broadcom (NASDAQ:AVG) has been a juggernaut over the past few years, and it will not be slowing down. The AI chipmaker posted a 20.8% return in June, and its stock price is up about 47% YTD.
Like the opposite two stocks on this list, Broadcom stock was fueled by a wonderful quarterly earnings report in June. The corporate grew revenue by 43% yr over yr in its fiscal second quarter to $12.5 billion.
Its net income tumbled about 40% yr over yr, but that was impacted by expenses related to the acquisition of VMware last yr. Nonetheless, the adjusted net income, minus acquisition costs and other one-time expenses, soared 20% to $5.4 billion, or $10.96 per share.
Those gains were driven by its AI chips, which generated record revenue within the quarter.
The opposite huge catalyst was the announcement of a 10-for-one stock split, which can take effect on July 15. When the split kicks in, investors will receive nine additional shares for each share they own.
The stock split could also fuel future growth, as Broadcom’s share price shall be lower by an element of 10, making it more accessible to more investors. It’s currently trading at $1,638 per share.
Beware valuations amid the potential
All three of those stocks are trading at high multiples, so be mindful of their valuations. Nonetheless, all have excellent earnings potential and are price considering as long-term options.
Most immediately, search for Broadcom to potentially pop after the stock split, but again, regulate the price-to-earnings ratio.