Whoa! What Just Happened to My Stock?
The markets resumed their tumbling ways, but just because your stock strapped on a rocket pack instead, resist the urge to high-five everyone in the cubicles next to you. Smart investors won't celebrate until they know that upward leap was justified. Without a fundamental basis for the bounce, these stocks can quickly make the return trip down.
Is now the time to lock in profits, or is this just the first step toward even higher valuations? Let's examine a few stocks that just hit the afterburners, and see whether they're truly headed into orbit.
Sept. 21 Change
|JA Solar (NAS: JASO)||***||12.5%|
|Human Genome Sciences (NAS: HGSI)||**||12.2%|
|Allos Therapeutics (NAS: ALTH)||****||11.6%|
With the Dow Jones Industrial Average (INDEX: ^DJI) falling 284 points Wednesday, or 2.5%, stocks that went appreciably higher are pretty big deals.
A break in the clouds
Solar sure is cheap these days, but it's warranted. The support system underpinning much of the growth is drying up or has already faded away. With European governments teetering on the brink of default, they can no longer afford the generous subsidies that were ladled out to encourage production and installation.
And suddenly, the U.S. no longer looks like it's going to pick up the slack. Solyndra's bankruptcy, combined with allegations of crony capitalism, will at best delay subsidies coming solar's way.
That could prove to be a problem for First Solar (NAS: FSLR) , which is counting on taxpayers for three loan guarantees for projects it has. Add in new environmental concerns after JinkoSolar (NYS: JKS) was caught polluting a river, and even Chinese solar companies like JA Solar don't seem like sure bets anymore.
Yet 95% of the more than 1,750 CAPS members weighing in on JA believe it will outperform the broad market averages over the long haul. Let us know in the comments section below or on the JA Solar CAPS page whether you think there are sunny days ahead.
Get hip to it
Earlier this year, people with lupus were given the option of a new treatment for the first time in 50 years. Human Genome Sciences and marketing partner GlaxoSmithKline won FDA approval for Benlysta, a milestone achievement by a biotech that was all but left for dead just a few years ago.
Even with limitations -- certain segments of the population apparently don't respond to Benlysta, while patients expressing some symptoms shouldn't use it at all -- it was generally agreed the drug had a huge market opportunity.
We got a sense of how big that market could be when it was reported that August sales of Benlysta were $6.5 million, up from $4.9 million the previous month. Analysts were surprised by the strength of the sales, saying they had expected sales of $6.3 million.
Remarking on its "explosive potential," CAPS member pchop123 took a cue from several insiders who began buying shares of HGS a few weeks ago. Although it sports a low two-star rating, 80% of the CAPS members rating Human Genome Sciences think it can still beat the Street.
Add the biotech to your watchlist then leap on over to read what others are saying on the Human Genome Sciences CAPS page.
A betting man
In some situations, money is everything. Despite being already committed to a merger with AMAG Pharmaceuticals (NAS: AMAG) , Allos Therapeutics reported that an unnamed company was trying to lure it away and that Allos was willing to negotiate with it. According to an article on TheStreet.com, the shadowy figure is Spectrum Pharmaceuticals (NAS: SPPI) .
It's not like the AMAG deal was going to be smooth. Two of the pharmaceutical's biggest shareholders opposed the deal, no doubt because Allos' lymphoma treatment Folotyn has suffered from poor sales. Of course, AMAG's own iron replacement therapy, Feraheme, has been struggling in the market, too. Two weak companies don't necessarily make a stronger one.
Yet the stock still commands respect from the CAPS community, where 94% of the All-Star members weighing in on Allos believe it will outperform the broad market indexes. You can add Allos Therapeutics to your watchlist and let us know in the comments section below what you think.
Going into orbit
It pays to start your own research on these stocks on Motley Fool CAPS, where you can read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from the stock's CAPS page. Then you can decide for yourself whether your stock's headed for reentry, or off to infinity and beyond.
At the time this article was published Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of GlaxoSmithKline and First Solar. Motley Fool newsletter services have recommended buying shares of First Solar and GlaxoSmithKline. 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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