The S&P 500's Best Stocks in August

The S&P 500's Best Stocks in August

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The S&P 500 didn't manage to post quite as big a loss as some other popular market measures, but its 3.1% decline still marked its worst performance since May 2012. Further rises in bond yields and a continued climb in gold prices reflected the uncertainty that stock investors felt about the future of the market. Moreover, with September seen as a seasonally weak part of the year, traders with a more short-term mind-set got increasingly edgy about the prospects for the four-and-a-half year long bull market's ability to last much longer.

Despite the market's overall weakness, though, several stocks in the S&P 500 manage to produce sharp gains. Let's look at the S&P's four best performers in August.

Best Buy rose 19.6%, topping the index. Just about all of the big-box electronics retailer's jump came following its second-quarter earnings report, in which the company managed to produce almost triple the adjusted net income that investors had expected. Thanks to double-digit improvement in online sales and the success of cost-cutting measures, the stock managed to rally despite an overall decline in comparable same-store sales of 0.6% and an overall drop in revenue. Strength in sales of appliances as well as computers and phones helped offset weakness in consumer electronics, and investors are getting more comfortable with the idea that Best Buy will have to focus on services and high-margin items even if it means giving up much of its traditional business.

Netflix posted a 16.1% gain in August, even though it didn't have any one catalyst driving the shares higher. The company rolled out its new profile platform early in the month, allowing individual family members to have recommendations tailored to their own tastes. The good news for investors is that the company will charge $4 extra to allow up to three or four people to stream from the same account, which individual profiles will likely make happen more frequently. Improved recommendations stemming from analysis of viewing habits should also make the service more valuable and hopefully driving subscriber growth.

Pioneer Natural Resources climbed 13.1% for the month. Just about all of its gain came on the first day of the month, when the oil and gas exploration company posted a 29% gain in revenue in its quarterly earnings report and boosted its future guidance on production growth to the upper end of a previous range. The third-largest oil producer in Texas, Pioneer is a relatively small company, yet it sees potential resources equivalent to 9 billion barrels of oil.

Finally, gained 12.3%, with most of those gains coming yesterday as the cloud-computing company posted strong earnings. A 31% jump in year-over-year revenue and increases in full-year guidance were enough to make investors optimistic about the company's future. Moreover, with CEO Marc Benioff celebrating the company's huge growth over the past four years, Salesforce seems to be in full control of its own destiny going forward.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Netflix and and owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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