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 trading days:
CAPS Rating(out of 5)
Change Past Week
Martha Stewart Living Omnimedia (NYS: MSO)
Talbots (NYS: TLB)
XenoPort (NAS: XNPT)
Source: Motley Fool CAPS, percent change from Dec. 5 to Dec. 12.
A better deal for Martha?
It's been a long time since the diva of domesticity, Martha Stewart, had everyone scratching their heads over her partnership with Sears Holdings' cut-rate Kmart stores. The new agreement for J.C. Penney (NYS: JCP) to take a 17% stake in Martha Stewart Living Omnimedia makes a lot more sense. Well, to almost everyone.
Macy's (NYS: M) is likely to be annoyed, since it has carried an exclusive Martha Stewart line for years. Having a competitor now holding two board seats of the media and merchandising company doesn't sit well, but analysts think the retailer won't drop her entirely because it's the company's top-selling home goods brand, according to one source. Paraphrasing that source, you don't cut off your nose to spite your face.
For J.C. Penney, which reported a difficult November as it bucked the new trend of opening at midnight on Black Friday -- it chose to open at its traditional 4 a.m. and suffered a 2% drop in comps for the month -- bringing the domestic goddess on board could help its business rebound.
Likewise, Penney's won't see any increased store traffic but I do think the Martha Stewart sales will improve at Penney's versus Macy's. But, lets face it, Martha Stewart is losing money on an operating basis. And, I will always avoid a marketing concept based on one person!
Tell me in the comments section below or on the Martha Stewart Living Omnimedia CAPS page if you think this signals a U-turn for the retailer, then put it on your watchlist to keep track of its progress.
Letting the door hit you on the way out
After reports surfaced that private equity firm Sycamore Partners had approached Talbots with a $3-per-share buyout offer representing a 92% premium to its pre-offer closing price, the stock took off. But the shares are still well shy of $3 because management hasn't been in a hurry to accept the bid. Considering the way the women's clothier has treated shareholders in the past, investors shouldn't be surprised.
From inventory issues to missing its own earnings expectations, Talbots has underwhelmed the market. Its CEO, who recently announced she was retiring with a hefty severance package despite destroying shareholder value over the past few years, ranks up there as one of the worst CEOs of the year.
With much-better-run women's retailers out there to choose from -- look at Chico's (NYS: CHS) , Ann Taylor, or New York & Co. -- there's no reason for investors to dump their money into Talbots' stock. I'm joining the Fool's Alyce Lomax in marking Talbots to underperform the markets, because a board of directors that's willing to shower a ruinous executive with riches and hesitate to accept a premium buyout offer seems incapable of righting what's wrong with the company.
Add Talbots to your watchlist and let us know in the comments section below if anyone else at the retailer should be shown the door.
The same, but different
Biotech XenoPort saw a fairly impressive percentage reduction from baseline in "off time" when comparing its experimental Parkinson's disease therapy 279/CD against Merck's (NYS: MRK) Sinemet, but in the overall scheme of things, other than dosing frequency, it didn't really amount to much.
279/CD taken three times a day saw the effects of the drug wear off and the Parkinson's symptoms return after 2.9 hours; Sinemet, a drug taken four or five times per day, had the same results after 2.6 hours. Since there was little other benefit, XenoPort says it will stop funding research -- which is currently in phase 2 trials -- until it can figure out where it can take it from here.
Having missed badly with its last earnings report, XenoPort shares are trading more than 65% below their 52-week highs. That could be why less than three-quarters of CAPS All-Stars rating the biotech think it will outperform the broad market indexes, but you can add the stock to the Fool's free portfolio tracker to keep on top of developments as they occur.
At the time thisarticle was published Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of New York & Co. 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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