You saw the headlines. You know your stock's 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.
Natural gas producer Hugoton Royalty Trust (NYS: HGT) was one of the biggest losers last week, losing nearly half its value after ExxonMobil (NYS: XOM) subsidiary XTO Energy settled a class action lawsuit that requires the trust to bear 80% of the burden, or nearly $30 million. Hugoton says that the cost will outweigh the revenues it generates from the net profits interest it receives from its Oklahoma and Kansas properties for 18 months.
Hugoton and XTO own oil- and gas-producing properties in Kansas, Oklahoma, and Wyoming. Hugoton has an 80% interest, XTO 20%, hence the settlement agreement requiring the trust to pony up the lion's share of the payment.
Although Hugoton did realize higher oil prices last quarter, it is primarily a gas producer and it has been battered by the collapse of pricing in the industry. Net profits in the segment were down 17% and were actually down 30% in oil, too, as sales volumes shrank.
While 95% of the 302 CAPS members rating Hugoton think it will outperform the market, AlwaysKnowBetter says chasing yield can be a risky venture. Despite the dividend listed as yielding 9%, the situation is about to take a turn for the worse. "Playing the Dividend Game can be very expensive. Don't let the numbers fool you. Look for value!"
Tell us in the comments section below or on the Hugoton Royalty Trust CAPS page if you think the driller will collapse further, then add the stock to your watchlist to see how this change in fortune plays out.
What's the next sequence?
While (NAS: GNOM) reported positive earnings results earlier this month and said it had sequenced the genomes of 600 individuals from 20 Mexican-American families from San Antonio in what is thought to be the largest whole genome sequencing family study conducted so far, it wasn't until late last week that the stock went on a tear and ended at $3 a share, more than 80% higher than where it began.
There was no news to fuel the fire sending shares up, which should give investors pause to consider whether the gains will hold. While nearly 10% of the stock is sold short, the short interest ratio is only two days to cover, so we can't logically think there was any sort of squeeze involved. Maybe this is the beginning of the next bubble that my Foolish colleague Alex Planes cautioned was starting, which means investors would do better investing in Illumina (NAS: ILMN) , the preeminent genomics and DNA sequencing technology leader.
I've rated Complete Genomics to underperform the market, and while 80% of the broader CAPS community rating the genomics specialist thinks it will go on to beat the Street, the two-star rating they've assigned the stock suggests they believe there are better places for your money.
Add Complete Genomics to the Fool's free portfolio tracker to see whether it's just getting ready to go or is about to flame out.
Read all about it!
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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 Illumina. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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