Market volatility rose in November as earnings season ended and investors struggled with unstable macroeconomic conditions. Some of the biggest stocks in the market experienced huge gains and losses. Here's what caused the biggest changes in market value in the market.
Pfizer
Pfizer (PFE +0.30%) is one of the most valuable pharmaceutical stocks, and its price rose about 24% in November. That's an enormous move for a giant drug company. The stock popped early in the month after it announced positive clinical trial results for its COVID-19 treatment pill. The results claim to reduce the risk of hospitalization by nearly 90%. It's a huge global market, and it seems increasingly likely that COVID-19 won't be going away any time soon.
The stock continued its upward march throughout the month, as COVID-19 returned more ominously to the news. Rising case volumes in Europe triggered increased restrictions, while the emergence of the omicron variant in southern African countries concerned researchers about its transmissibility and resistance to immunity.
Pfizer is sure to deal with competition, and a COVID-19 drug would simply be on in its bigger portfolio. Despite its big month, though, the stock still only has a forward PE ratio of 11.3 and an almost identical enterprise-value-to-EBITDA ratio. Value investors should kick the tires at this valuation.
Ford
A few years ago, traditional automaker stocks were just about left for dead in the market. Ford (F +4.06%) took another step toward reversing a nearly decade-long slide, as it rose 13% in November. The company kept its momentum with a strong quarterly earnings report in October, and that carried into November when it reported strong interim sales.
Ford is growing market share. It also owns 12% of Rivian (RIVN 0.82%), the latest rock-star electric vehicle stock that's getting tons of media attention.
Ford is far from perfect, and it always will operate in an environment that is both fiercely competitive and highly cyclical. It's hard to think that it will ever be a growth stock. However, its forward PE is only 10. That's probably refreshing for investors who are used to paying huge premiums for high-flyers like Tesla (TSLA +2.40%), which trades at a 22.5 price-to-sales ratio. It's easy to see why Ford is getting attention in today's market.
Image source: Getty Images.
Roblox
Roblox (RBLX 0.39%) might be the belle of the gaming stock ball, and that's a good spot to occupy. The stock leaped 50% higher in November after posting fantastic quarterly results. It boasted roughly 30% increases in daily active users, engaged user hours, and in-game currency purchases. It followed up by impressing investors by detailing its growth roadmap at an analyst day.
Speculation about the future of virtual and augmented reality certainly helped fuel the stock's rise as well. If you want to jump on board, you'll have to ignore the valuation ratios, which are staggeringly high. Roblox is a promising play on the future of gaming, and you have to pay a premium for the right to experience whatever the future holds.
Twitter (TWTR +0.00%) has nearly reached public utility status as a news and PR platform. Despite its pervasive touch, it still struggles to create value for investors. Its current price is nearly identical to its 2013 IPO after the stock dipped 18% in November.
TWTR Total Return Level data by YCharts
The latest struggles follow a Q3 earnings report that disappointed Wall Street, followed by the announcement that CEO Jack Dorsey would step down. Despite delivering 37% revenue growth over last year, Twitter's operating profits actually fell. It seems that the company is struggling with the iOS privacy changes that are challenging profitability among other social media stocks.
There's definitely uncertainty in the Twitter story. It's also more expensive relative to earnings than social media powerhouse Meta Platforms (FB +1.33%). It might be an interesting time to buy on the dip if a change in leadership can turn the story around, but the risks are clear.
Cruise lines
Finally, there was carnage among travel stocks, especially for cruise lines. Carnival (CCL +6.85%), Norwegian (NCLH +4.78%), and Royal Caribbean (RCL +8.75%) all fell 17% to 24% in November due to renewed COVID-19 fears. Obviously, we all hope that the spiking case numbers in various parts of the world are controlled and that the new omicron variant winds up having only mild effects on public health.
Even in that case, a return of travel restrictions is likely. Consumers are also less likely to venture out in the face of increased risks. These companies are getting well acquainted with these challenges, but they can't experience steep disruptions indefinitely. These businesses are the opposite of nimble. They tend to use a lot of debt in their capital structure, and their heavy physical equipment requires significant capital expenditure. With all those fixed cash outflows, investors are quick to run whenever sales are threatened.
PFE Total Return Level data by YCharts
