What Happened?

A number of stocks jumped in the afternoon session after investor sentiment improved on renewed optimism that the US-China trade conflict might be nearing a resolution. According to reports, Treasury Secretary Scott Bessent reinforced this positive outlook by describing the trade war as "unsustainable," and emphasized that a potential agreement between the two economic powers "was possible." His comments signaled to markets that both sides might be motivated to seek common ground, raising expectations for reduced tariffs and more stability across markets.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, following stocks were impacted:

Zooming In On Nextracker (NXT)

Nextracker’s shares are extremely volatile and have had 33 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 3 months ago when the stock gained 26% on the news that the company reported a solid "beat-and-raise" quarter. Fourth quarter results blew past analysts' revenue, EPS, and EBITDA expectations. Looking ahead, the company raised its full-year EPS and EBITDA guidance. Management pointed to a stronger sales pipeline, with contributions from all regions and new products, a positive sign for future demand. Overall, this was an impressive quarter.

Nextracker is up 4.2% since the beginning of the year, but at $41.17 per share, it is still trading 32% below its 52-week high of $60.53 from June 2024. Investors who bought $1,000 worth of Nextracker’s shares at the IPO in February 2023 would now be looking at an investment worth $1,352.

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