Why Rite Aid, Novavax, and RH Jumped Today

Markets Motley Fool

Tuesday was a mixed day for the stock market, with major benchmarks moving in different directions. The Dow Jones Industrials lost ground due to a high-profile earnings miss from a major Wall Street investment bank, but the Nasdaq Composite rose on strength among components in the technology-heavy index. Some market participants reacted negatively to news that the Senate had given up on healthcare reform, but in the summer lull, earnings reports took on greater importance as well. Some stocks enjoyed sharp gains, and Rite Aid (NYSE: RAD), Novavax (NASDAQ: NVAX), and RH (NYSE: RH) were among the best performers on the day. Below, we'll look more closely at these stocks to tell you why they did so well.

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Rite Aid rebounds

Shares of Rite Aid gained 12% in the wake of positive sentiment for the beleaguered drugstore chain. Now that its planned merger with Walgreens Boots Alliance (NASDAQ: WBA) has turned into a mere asset sale, Rite Aid has to figure out how to move forward as a smaller player against tougher competition. Yet some investors are growing more hopeful about Rite Aid's prospects, arguing that the chance to pay down most of its outstanding debt should reduce interest expense and boost its bottom line. Some also believe that Rite Aid might get another acquisition bid, especially if major online retailers decide that buying its remaining store network would make a good opportunity to move more aggressively into the healthcare retail business. With shares having fallen so far, more value investors are likely to look at Rite Aid as a potential bargain buy.

Novavax builds suspense

Novavax stock soared 27% after announcing that it will offer an update on its RSV F vaccine development program next week. The update should include top-line data from a phase 2 trial looking at safety and immunogenicity issues in older adults. Investors will also learn about additional findings from previous phase 2 and phase 3 clinical trials in older patients, along with a phase 3 trial for infants whose mothers get immunized during pregnancy. From the stock's movement, shareholders clearly hope that the news will be better than the troubling results late last year that sent Novavax stock plummeting. Yet it seems unlikely that the company could have enough positive data to justify such a large upward move for shares today.

RH bucks the odds

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Finally, shares of RH rose 10%. The luxury home furnishings retailer formerly known as Restoration Hardware has attracted the attention of short-term traders, with a battle between short-sellers betting on continued hard times for the company and shareholders looking for a rebound. Even though Wall Street analysts have weighed in with some concerns about RH's future in a highly competitive industry, the stock has regained all its lost ground from late last week and climbed more than 10% in two days' time. Longer-term investors still fear that RH's prospects aren't strong and have doubts about its turnaround strategy. With traders pointing to a potential short squeeze, however, RH's shares could keep climbing substantially in the near term.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends RH. The Motley Fool has a disclosure policy.