Liquidity Services Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Liquidity Services (NAS: LQDT) surged 13% in early trading and remain up about that much as the closing bell approaches. Analysts at highly rated researcher Stifel Nicolaus initiated coverage of the stock with a buy rating.

So what: I don't have access to Stifel's note so I can't tell you what drove the rating, but it's a good bet that a new federal contract helped. On Monday, Liquidity Services announced an extension to its existing deal with the Department of Defense.

Now what: Much like eBay (NAS: EBAY) for consumer goods, Liquidity Services processes and sells via auction excess scrap accumulated and declassified by the DoD. It's been a good business. Adjusted profits have improved by more than 19% annually over the past three years. Is that enough growth to support the stock's valuation? You tell me. Weigh in using the comments box below.

Interested in more info on Liquidity Services? Add it to your watchlist byclicking here.

At the time this article was published Fool contributor Tim Beyers is a member of theMotley Fool Rule Breakersstock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.Motley Fool newsletter services have recommended buying shares of Liquidity Services and eBay. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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