Hot Stocks: CCL offering sparks cruise selloff; DFS falls on earnings; ONEM surges on AMZN deal

Jul. 21, 2022 5:57 PM ETDiscover Financial Services (DFS)AMZN, RCL, CCL, HCSG, NCLH, ELF, ONEMBy: Brian Stewart, SA News Editor1 Comment

Trading Charts on a Display

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Wall Street recorded its third consecutive day of gains, as soft jobs data encouraged hope that the Federal Reserve could moderate its hawkish stance. With Tesla earnings also contributing to the positive sentiment, the Nasdaq led the charge with a gain of 1.4%.

While the overall market performed well, cruise stocks suffered a major setback. Word of a $1B share offering from Carnival (CCL) sparked selling, with Royal Caribbean Cruises (RCL) and Norwegian Cruise Line (NCLH) also losing ground.

Discover Financial (NYSE:DFS) represented another standout loser, dropping 8% following the release of its latest quarterly results. Meanwhile, Healthcare Services (HCSG) extended an earnings-inspired slide posted the previous day, reaching a new 52-week low.

Turning to some of the day's standout gainers, a merger deal with Amazon (AMZN) caused One Medical (ONEM) to expand its value by more than two-thirds. At the same time, e.l.f. Beauty (ELF) added to a two-month upswing, pushing to a fresh 52-week high.

Sector In Focus

A stock offering prompted mass selling in Carnival (CCL), with the rest of the cruise sector dropping in sympathy. The declines came amid concerns about dilution and the general need for these companies, which were hard hit during the COVID lockdowns, to raise capital.

CCL plunged 11% after revealing that it has commenced an underwritten public offering of $1B of common stock. With the slide, the stock moderated some of its recent gains. Prior to the announcement, the stock had recorded its highest close since early June.

Dragged down by the CCL headline, Royal Caribbean Cruises (RCL) declined 8%, while Norwegian Cruise Line (NCLH) retreated by 7%.

Standout Gainer

News of a merger deal with Amazon (AMZN) sent One Medical (ONEM) soaring, with the stock jumping 69%

Under terms of the agreement, AMZN will pay $18 per share in cash for the health services company. The deal has a total value of about $3.9B, including debt.

ONEM surged by $7.07 to finish the session at $17.25. With the advance, the stock recorded its highest close since early January. AMZN advanced nearly 2% on the news.

Standout Loser

Discover Financial (DFS) lost ground following the release of its latest quarterly results, falling 8% on the day. The company's Q2 financial figures beat expectations but investors focused on an increase in credit loss provisions.

The financial services company said its quarterly profit fell from last year, but the decline was not as steep as analysts had projected. Meanwhile, the company increased its provision for credit losses to $549M, flashing a potential red flag about the consumer.

DFS closed at $100, a decline of $9.80 on the day. The slide reversed some of the gains posted over the previous few weeks.

Notable New High

e.l.f. Beauty (ELF) expanded a rally it has experienced since late May, driving to a new 52-week high. Shares advanced 3% on the session.

Shares of the cosmetics company began to build momentum after the announcement of its latest earnings report on May 25, which was released shortly after the company reached a 52-week low of $20.49.

With better-than-expected earnings and revenue, ELF jumped 11% the day after the results came out, with the momentum continuing for much of the next two months.

On Thursday, the upward march pressed forward, with the stock reaching a 52-week high of $34.63. The stock eventually closed at $34.32, an advance of $1 on the day.

ELF has climbed 67% since hitting its low.

Notable New Low

Healthcare Services (HCSG) added to the weakness prompted earlier this week by the release of disappointing earnings news. The stock fell another 8%, adding to a 16% post-earnings drop seen the previous day.

The stock retreated $1.29 to finish at $14.26 after hitting an intraday 52-week low of $13.80. Shares have fallen 23% in the last two days. Longer term, HCSG has dropped almost 47% in the past year.

The provider of services to healthcare facilities, like housekeeping and dining, missed expectations with its Q2 profit. Revenue advanced nearly 7% to reach almost $425M.

To view more of the best- and worst-performing stocks, head over to Seeking Alpha's On The Move section.

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