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Why Barnes & Noble, Five Below, and Broadcom Jumped Today

Dan Caplinger, The Motley Fool

Wall Street finished the week on a downbeat note, with modest declines for most major benchmarks. A combination of macroeconomic and geopolitical factors weighed on market sentiment today, including yet another salvo of tariff threats from the U.S. against China and signs of escalating wage growth that could bring sharper inflation in the future. Yet the U.S. economy has thus far been quite resilient even in the face of these uncertainties, and some stocks were able to see substantial advances even on a down day for the broader market. Barnes & Noble (NYSE: BKS), Five Below (NASDAQ: FIVE), and Broadcom (NASDAQ: AVGO) were among the best performers on the day. Here's why they did so well.

Is Barnes & Noble a takeover target?

Shares of Barnes & Noble jumped 16.5% in the wake of takeover speculation. Investment company Schottenfeld Management revealed that it had taken a roughly 7% stake in Barnes & Noble yesterday, up by more than a percentage point since its July disclosure filing. Schottenfeld believes that the bookseller's stock is trading much more cheaply than its actual value, and the investment company also hopes that Barnes & Noble could put itself up for sale and successfully find a buyer. It's uncertain whether any potential acquirer would want to step into the middle of a tough retail environment right now, but bullish investors are still hopeful that they can find a successful exit after years of falling share prices.

Barnes & Noble location with palm trees on a clear, hazy day.

Image source: Barnes & Noble.

Five Below is a cut above

Five Below stock climbed 13% after the company announced its second-quarter financial results. The retailer of fashion accessories and other products for tween and teen shoppers reported revenue growth of 23%, with solid comparable-sales gains of 2.7% and a dramatic increase in the number of stores in the Five Below network. The retailer's strategy appears to be going well as it looks to expand its territory while also taking advantage of digital marketing opportunities, and improved guidance for the remainder of the fiscal year shows that Five Below sees a lot of promise as the key holiday shopping season approaches.

Broadcom climbs on data center success

Finally, shares of Broadcom finished higher by 8%. The semiconductor maker reported its fiscal third-quarter financial results, which included a 13% gain in revenue and a better-than-20% jump in adjusted earnings per share. CEO Hock Tan noted that "data center demand is driving strong growth in more than 50% of our consolidated revenue," as enterprise storage remains the fastest area of expansion for Broadcom. Many investors were also pleased to see favorable guidance for the current quarter, and although some have been nervous about Broadcom's pending deal to acquire CA Technologies, some specifics about the future of the combined company also put fears to rest and helped shareholders become more bullish about Broadcom's long-term prospects.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends Broadcom Ltd and Five Below. The Motley Fool has a disclosure policy.