Whoa! These 3 Stocks Just Beat the Dow

Loose lips sink ships. Someone should have reminded the head of the eurozone's finance ministers of that World War II slogan before he said openly what everyone feared: the bailout plan to save Cyprus by seizing the assets of individual depositors was a "template" to be used again in the future. Although he scrambled to unsay what was already unsaid, you can't unring the bell and the Dow Jones Industrial Average fell 64 points yesterday.

As Luxembourg's Prime Minister Jean-Claude Juncker noted last year, "We all know what to do, we just don't know how to get reelected after we have done it." When such tidbits of honesty by politicians and officials are actually spoken, it tends to shake the faith of the markets (the Dow fell almost 60 points the day after Juncker's quote was reported and was down more than 200 points that week).

The three stocks below, however, had their own bits of truth to tell and rose as a result. But resist the urge to high-five everyone in the cubicles next to you. Smart investors won't celebrate until they know why their stock surged, because without a fundamental basis for the bounce, these stocks could just as quickly make the return trip down.

A diluted vision
Shares of drug maker Horizon Pharma have surged 18% over the past week since it reported earnings, but the stock is up 33% over the past month and is 43% above its lows. Although it gained a lot of traction yesterday, perhaps in part due to an article on Seeking Alpha on Sunday suggesting the stock had bottomed, the drug maker also has a growing short interest that stood at over 14 days to cover at the end of February, meaning that it would take two weeks to completely buy back all the shares sold short. The Motley Fool believes anything over seven days is a lot, and the positive news may have pushed short-sellers to start covering their positions.

Horizon has diluted the heck out of the stock over the past year, going from 9 million average shares outstanding at the end of 2011 to almost 39 million shares at the end of last year. But when you look at the quarterly numbers, you see it ended the year with more than 61.5 million shares out, a crippling handicap that has depressed the stock.

Sales for the quarter were up 123% as rheumatoid arthritis and osteoarthritis treatment Duexis sales surged 57%. It also launched Rayos in the quarter, an extended release formulation of prednisone, so Horizon ought to continue bounding back from here.

Race to the finish line
Cancer drug developer Galena Biopharmaceuticals is confident enough in its experimental treatment NeuVax that it went out last week and bought for $10 million the rights to Abstral, a fast-acting drug designed to treat severe pain in cancer patients. Another $5 million will be paid in a year's time.

Abstral is the best-selling drug of its kind in Europe, says Galena, and had $54 million in sales in 2012. Those revenues will be useful in supporting continued research on NeuVax and its other therapies, and should alleviate any concerns it will run out of money before then. The company said it has enough cash on hand to remain solvent into 2014.

Despite some notable critics of the treatment, NeuVax has been moving through clinical trials, and the biopharma got Teva Pharmaceuticals to agree to develop and market the therapy in Israel when approved. Motley Fool blogger Mohsin Saeed thinks that even with shares up 36% year to date, there's still plenty of upside left in this stock.

Left at the altar
Maybe it's the "rising tide lifts all boats" syndrome, but Sonus Networks seems to have gotten a boost from the news that Oracle is buying intelligent network control technology specialist Tekelec for an undisclosed sum. It will integrate Tekelec's solutions into those of Acme Packet's, which Oracle bought for $2.1 billion last month.

Always the bridesmaid never the bride, investors hope that industry consolidation will propel someone -- anyone! -- to also hook up with Sonus. But it wasn't alone in the marriage sweepstakes game as Broadsoft also jumped 7% on the possibility of being taken to the altar.

Considering the apparent interest Oracle has in VoIP capabilities as evidenced by its recent acquisition spree, both Sonus and Broadsoft would both make a viable addition to its portfolio. Wedding bells may yet be in their future.

While you can certainly make huge gains in big movers like these stocks, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The article Whoa! These 3 Stocks Just Beat the Dow originally appeared on Fool.com.

Fool contributor Rich Duprey owns shares of Oracle. The Motley Fool recommends Acme Packet. The Motley Fool owns shares of Oracle. 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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