NetLogic Shares Popped: What You Need to Know

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 NetLogic (NAS: NETL) rose as much as 13% and kept most of the gain throughout the trading session, closing up 12% on the day. Good results from Cisco (NAS: CSCO) appear to have lifted the stock, as was the case for many networking equipment companies.

So what: Looking at Cisco CEO John Chambers' comments, I wonder whether the broader rally is overdone. Chambers talked mostly about action plans for overcoming his company's specific challenges and successes to date.

Now what: So while Cisco's beat is impressive, rubber-stamping it as a mandate for an ongoing tech rally may be going too far. For NetLogic -- an expensive stock that trades for 20 times long-term earnings estimates -- fading euphoria could mean a not-insignificant pullback. Tread carefully, Fool. Do you agree? Disagree? Weigh in using the comments box below.

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At the time this article was published Fool contributorTim Beyersis 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'sportfolio holdingsandFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.The Fool owns shares of and has created a bull call spread position on Cisco Systems.Motley Fool newsletter serviceshave recommended buying shares of Cisco Systems. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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