The stock market has done reasonably well to begin 2023, but it's inevitable that investors have to deal with some downdrafts along the way. After a jobs report last Friday that suggested the employment picture in the U.S. remains strong, many market participants have now turned their attention to inflation data due out later this week. That sent markets lower to begin the regular trading session on Monday, albeit by relatively modest amounts of less than 1%.
Even with Wall Street coming back to work in a less-than-perfect mood, a pair of stocks vaulted out of the gate. Greenbrier (GBX) isn't the best-known company, but its latest financial report showed strength in the transportation sector that could offer a positive reading on the broader economy. Meanwhile, Micron Technology (MU -0.60%) was also on the rise as investors were pleased to see a key competitor choose to cut back on production.
Greenbrier chugs ahead
Shares of Greenbrier were up more than 9% on Monday morning. The maker of railcars and other transportation equipment reported fiscal second-quarter financial results for the period ended Feb. 28 that showed a dramatic bounce from poor performance a year ago.
Greenbrier's latest financial numbers were impressive. Sales for the quarter jumped 64% year over year to $1.12 billion. Costs also rose, but not at the same pace, and net income nearly tripled from year-ago levels to $33.1 million. That produced adjusted earnings of $0.99 per share for the period.
Fundamental business metrics for Greenbrier also showed renewed demand for its products. The company got new railcar orders for 4,500 railcars and delivered 7,600, making its backlog 25,900 units. That represents about $3.1 billion of future revenue. Greenbrier also saw its liquidity improve, with $380 million in cash available at the end of the quarter.
Investors will have to wait until Wednesday to get the full story from Greenbrier, as that's when the railcar maker plans to make its investor day presentation. However, shareholders aren't being slow to get excited about the stock, and that's exactly what Greenbrier will need to build on if it wants to work its way out of the malaise it has been stuck in since hitting all-time highs in 2014.
Micron gets some help from its peers
Shares of Micron Technology got a 5% boost on Monday morning. The maker of memory semiconductor chips will likely benefit from a move that a key competitor made, in light of signs that high levels of supply are starting to force industry leaders to react.
Korean giant Samsung Electronics announced over the weekend that it expects to reduce its production of semiconductor chips significantly in the next several months. It cited reduced customer demand and a massive increase in supplies of available chips as the reason for its strategic move, which it is making in part to try to get its profits back up after seeing relatively weak performance in the first quarter of 2023.
For its part, Micron got a positive response from stock analysts at Goldman Sachs. Citing the Samsung production cut, Goldman boosted its price target on Micron from $65 per share to $70. If other major players in the memory chip industry make similar cuts, then it could push prices back upward and mean more profits for micron and its peers.
Some investors avoid Micron because of the extent to which it relies on memory chips, which are notoriously cyclical in nature. For those who see the long-term tailwinds supporting the semiconductor industry, however, Micron might be worth a closer look.
