What Just Happened to My Stock?
Better-than-expected economic data here at home coupled with a Europe apparently committed to fixing its financial house sent markets higher. Yet just because your stock strapped on a rocket pack and went even higher, 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 down the road? Let's examine several stocks that just hit the afterburners and see whether they're truly headed into orbit.
CAPS Rating(out of 5)
|Corinthian Colleges (NAS: COCO)||**||20.6%|
|VanceInfo Technologies (NYS: VIT)||**||18.0%|
|Glu Mobile (NAS: GLUU)||**||15.0%|
With the Dow Jones Industrial Average (INDEX: ^DJI) jumping 131 points on Tuesday, or 1.2%, stocks that went appreciably higher are pretty big deals.
A dry hole
An analyst upgrade of for-profit educator Apollo Group had the salutary effect of lifting many names in the space, with Corinthian Colleges going to the head of the class. Indeed, Apollo itself rose only 8.5% on the day, yet I wouldn't count too much on their graduating further from here. While I think President Obama's attack on for-profit educators is little more than a witch hunt in search of scapegoats, the Education Department is still implementing its "gainful employment" rules, albeit more slowly, and its inspector general recommends placing new hurdles in their path.
The IG's office found rings of students engaging in fraud of Title IV federal programs, so it wants schools to verify student identities before granting the money (but we can't ID voters before they vote). If implemented, it will lead the schools to spend more on monitoring and screening students, cutting into margins.
Already over the past year, for-profit educators have taken a beating, with very few showing any gains. Corinthian is down 76% and Apollo is off 16%. Bridgepoint Education (NYS: BPI) is one that's showed positive returns, rising 21% over the past 12 months.
I like the companies. I just find it hard to back them, even with a pick on CAPS, when the full weight of the federal government is bearing down on them. But share your thoughts on the Corinthian Colleges CAPS page if you think it won't be left behind, and then put it on your watchlist to keep track of its progress.
No pain, no gain
There was also no company-specific news to account for VanceInfo Technologies' rise yesterday, but maybe with speculation that Microsoft is mulling another bid for Yahoo!, investors think more business will be flowing its way.
VanceInfo is a Chinese IT service provider that also offers offshore software development and counts Microsoft as one of its largest customers. Together with Huawei, it represents 38% of the company's annual revenues, but it also does business with Expedia and TIBCO Software (NAS: TIBX) .
Yet just a few months ago, VanceInfo was "lacking clarity" on its future progress as the stock was slammed for reporting disappointing earnings and guidance. Still, analysts like its clean balance sheet, and its long-term growth estimates for the next five years may warrant keeping close tabs on it. With 92% of the CAPS members rating VanceInfo expecting it to outperform the broad market averages, it appears they're already watching. But the low two-star rating they've assigned it also suggests that they think there are better places for your money.
Tell us in the comments section below or on the VanceInfo Technologies CAPS page where you see the next growth driver coming from, and add it to your watchlist to be notified when they occur.
A day after Nasdaq published an article from Fidelity asking whether the rise of mobile gaming was the death knell for traditional gaming sites, one such specialist, Glu Mobile, was rising in response.
The popularity of games like Zynga's Farmville and Glu's own Contract Killer is causing traditional console game makers like Take-Two Interactive (NAS: TTWO) to consider making the move into mobile gaming as well. It's not so easy to make that transition, and considering how cheap such games tend to sell for, it won't be giving up on its bread and butter any time soon.
That leaves more market available to Glu, but it has to overcome the problem of being unprofitable. Unlike PopCap Games -- which Electronic Arts just bought -- or Zynga, Glu has yet to turn a profit, which could weigh it down. The Nasdaq article notes, however, that institutional investors have been buying up Glu shares and now hold as much as 17% of the company's float.
CAPS member MrCharity suggests investors not overlook Glu's potential.
GLUU has had a tremendous decline in the past few weeks however with the exception of a rumored loss of one really insignificant employee they have acquired two companies, expanded their titles, and continued to diversify the platforms where their games can be used. With more iPhones, iPads, and Android phones being purchased in the near future and over the holidays GLUU could pop! It could also be the target to be bought by a competitor.
Let us know on the Glu Mobile CAPS page whether you think it's still game-on for the game maker, and then add the stock to the Fool's free portfolio tracker to keep track of its progress.
At the time this article was published Fool contributorRich Dupreyholds no position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Yahoo!, Take-Two Interactive Software, Microsoft, and Bridgepoint Education.Motley Fool newsletter serviceshave recommended buying shares of Yahoo!, Tibco Software, Microsoft, and Take-Two Interactive Software, creating a bull call spread position in Microsoft, and writing puts in Bridgepoint Education. 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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