You saw the headlines. You know your stock price made a big move. But what does that portend for your investment's future?
By pairing the latest news with the collective wisdom of our 180,000-strong Motley Fool CAPS investing community, we might be able to discover whether your stock's latest exploits are a short-term hiccup -- or the start of a much bigger trend.
The following stocks have all made big moves over the past five days:
CAPS Rating(out of 5)
Change Past Week
Hollysys Automation Technologies (NAS: HOLI)
Travelzoo (NAS: TZOO)
Bank of Ireland (NYS: IRE)
Source: Motley Fool CAPS, % change from Jun30-July 8.
A high-speed crash and burn
Even before the tragic high-speed train crash in China last weekend, shares of Chinese motion control specialist Hollysys Automation Technologies were gapping lower, starting the day after they had received a nice bounce resulting from an analyst upgrade (nice timing, by the way). And despite reporting its signaling system operated properly during the crash -- key, since signal malfunction is being blamed for the crash that killed 39 passengers -- the stock continued to fall.
As you may have heard, one of China's bullet trains stalled on a track after being struck by lightning and a second train, which should have been warned about the stall but wasn't because of the signaling malfunction, slammed into the first. China has made a point of wanting to build out its high-speed rail system across the country, laying track that would far exceed the total in operation in 16 countries combined.
Earlier this year President Obama called for a six-year, $53 billion high-speed rail public works project. Specifics were sketchy, but we know that General Electric had signed an agreement with China's CSR, the maker of the trains involved in the crash, to make trains here. Siemens (NYS: SI) , Bombardier, and Alstom are other key high-speed rail players.
Hollysys, as a leading provider of high-speed train control centers (TCC) and automatic train protection (ATP) systems, was looking to be a key component of that buildout. During a situation like last weekend's crash, Hollysys' ATP systems -- installed in the front and rear of a train -- would receive signals from the TCC indicating a problem and controlling movement and stoppage. Despite management's contention to the contrary, as the investigation into the crash is only just beginning, there may be more fallout in the future.
CAPS All-Star tenmiles thinks the stock has been wrecked as a result of the crash beyond what it should and sees it as a short-term rebound play, but more than three quarters of the broad CAPS community rating the technology specialist thought it could beat the market. Still, with the crash creating uncertainty and the low two-star rating members have assigned to it, there may be better places for your money for the time being.
Let us know on the Hollysys Automation Technologies CAPS page whether you think it can get back on track.
The stock of online travel deal host Travelzoo suffered a crash of its own when efforts to raise its profile by highlighting its Local Deals service in an expensive ad campaign swiped $0.07 per share from earnings causing it to widely miss analyst expectations.
Travelzoo is getting lost in a menagerie of companies offering deals-of-the-day, including online travel agents Expedia (NAS: EXPE) and priceline.com (NAS: PCLN) . It may have been a necessary expense to avoid drowning in the next Groupon me-too deal, but it also highlights the very shallow moat that exists in the space. Investors might want to consider that before piling into a Groupon IPO.
The company's management is very suspect to me right now since they are just chasing a fad and are willing to risk a lot of margin for it. Not to mention it is over priced and has no real credible advantage in the exploding market for social marketing. I suppose you could buy it until groupon comes out, but if anyone has checked out groupon's prospectus......it's really ugly.
Follow along on how fast it can recover by adding Travelzoo to the Fool's free portfolio tracker.
Don't bank on it
Irish banker Bank of Ireland got a bit of a reprieve last week when a group of investors stepped in and deposited $1.6 billion to help ensure the government there doesn't take full control of the financial institution. Both it and Allied Irish Banks (NYS: AIB) are at the brink of a government takeover, so the move by the investors -- which include Wilbur Ross and Prem Watsa's Fairfax Financial -- was seen as a big vote of confidence.
It's a hopeful development to be sure, but I'm not convinced either bank is too big to fail yet and the state of sovereign finances across Europe -- let alone in the U.S., where the debt ceiling debate rages on still -- means there's plenty of time for governments to takeover banks to forestall the inevitable. European banks were stress tested in a bid to bolster faith in their stability, but really there's little confidence many are healthy enough to survive.
CAPS member markofzorro presciently believed there was still some saving grace left in Bank of Ireland before the investors ponied up the big bucks to buy their way in.
A speculation, obviously. Sells only 10% book value, strong government commitment, sharply down now over fears of Greek, Italian, and Portuguese defaults. I'm buying this PIGgy now and hope to be makin' bacon soon.
Add the bank to your watchlist then head over to the Bank of Ireland CAPS page to let us know if you'd deposit your own money there.
At the time thisarticle was published Motley Fool newsletter services have recommended buying shares of priceline.com and Travelzoo. 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.Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here.
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