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Why American Outdoor Brands, Tilly's, and Ulta Beauty Jumped Today

Dan Caplinger, The Motley Fool

Friday was a mixed day on Wall Street, with the Dow Jones Industrial Average easing lower even as the Nasdaq Composite and Russell 2000 posted modest gains. August has been an extremely favorable month for the stock market, and even though some investors have fears about the reputation that September and October have historically, most signs indicate that the U.S. economy remains on track for solid growth. Moreover, the strength of certain companies helped to boost confidence among market participants. American Outdoor Brands (NASDAQ: AOBC), Tilly's (NYSE: TLYS), and Ulta Beauty (NASDAQ: ULTA) were among the best performers on the day. Here's why they did so well.

American Outdoor Brands sees an earnings boom

Shares of American Outdoor Brands soared nearly 44% after the maker of guns and outdoor recreational products posted its fiscal first-quarter financial results. The company formerly known as Smith & Wesson saw sales rise modestly, but a huge improvement in profit margin helped American Outdoor Brands reverse a year-earlier loss to post a healthy amount of net income. Moreover, the gunmaker gave favorable guidance for the current quarter as well as the remainder of the year, signaling further anticipated success. Investors will be watching the midterm elections closely to see if results could lead to greater regulation of gun sales, which in turn could create short-term spikes in business activity for American Outdoor Brands and other manufacturers.

Simple flashlight with Smith & Wesson logo.

Image source: American Outdoor Brands.

Tilly's loves back-to-school season

Tilly's stock climbed 14%, extending its sharp advance on Thursday in the wake of favorable earnings results. Tilly's said that revenue climbed 13% on a 4.4% rise in comparable sales, with solid brick-and-mortar store performance and even better increases in e-commerce-related revenue. CEO Ed Thomas told investors that the back-to-school season had started well for Tilly's, and projections for the current quarter also appear optimistic about broader opportunities for the company to boost its fundamental strength. After tough times for retailers in recent years, Tilly's is glad to put the past behind it and look forward to a better future.

Ulta makes up ground

Finally, shares of Ulta Beauty rose 6%. The salon and cosmetics retailer had initially seen its stock fall in after-hours trading Thursday following the initial release of its second-quarter financial report, which included solid past results but troubling earnings guidance for the current quarter. Yet overnight, investors reconsidered their original skepticism, and they apparently concluded that prospects for big growth opportunities like the release of a new cosmetics line from celebrity Kylie Jenner could lead to gains in the long run. If that turns out to be the case, today's jump could be the first step toward challenging the record highs Ulta set last year.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends Ulta Beauty. The Motley Fool has a disclosure policy.