The Hottest Stocks Now

Almost anything can happen in the course of just one week.

There are many reasons why the price of a stock could see a big move upward in just seven days. But whatever is behind it, a surge in the price of a stock is an alarm. It's like smelling smoke, or hearing a scream or a cheer. Upon further investigation, it might turn out to be nothing -- but it could be a major event.

A big upward move in a stock's price can indicate that something has materially changed within a company that radically alters its desirability as an investment. This weekly column aims to decipher the reasons behind the week's biggest gainers.

This week's stocks can be compared in our 115,000-member CAPS community. Without further ado, here are some of this week's biggest movers.

Company

Industry

CAPS rating (out of 5)

Weekly percentage move (as of 9/11)

Cardica (Nasdaq: CRDC  )

Health Care

***

28.6%

Eddie Bauer (Nasdaq: EBHI  )

Consumer Goods

*

25.8%

La-Z-Boy (NYSE: LZB  )

Consumer Goods

*

23.6%

Southwest Bancorp (Nasdaq: OKSB  )

Banking

**

20.7%

K12 (NYSE: LRN  )

Diversified Services

***

20.6%

FDA boosts Cardica
The FDA approved the company's PAS-Port system used in cardiac bypass surgery. Heart surgery is a huge market. As the country's No. 1 killer, heart disease causes one of every five U.S. deaths. Bypass surgery is widely used, and studies show that it has been the most effective procedure for treating coronary heart disease. U.S. sales of this system, which is already being used in Europe and Japan, should help the company's already fast-growing net revenue numbers.

Here's what highly rated CAPS member TMFBreakerJava had to say back in May:

Coronary bypass surgery is a large market in need of a less traumatic solution than the prevailing standard of care, which involves splitting the chest, stopping the heart and weeks of painful recovery.

This company's product facilitates the minimally invasive solution provided by the da Vinci robot which allows closed chest, beating heart bypass surgery with far faster recovery and much less post surgical pain.

Investors smell an end to housing slump
In the midst of dark days for companies that depend on home sales and discretionary spending, La-Z-Boy was up big this week, on market reaction to the Fannie Mae (NYSE: FNM  ) and Freddie Mac (NYSE: FRE  ) bailouts. The market believed that Fannie and Freddie's salvation indicated a bottom to this crisis, possibly precipitating a housing market turnaround. Homebuilders and consumer discretionary stocks rallied. Although it's still unknown why La-Z-Boy rallied more than most similar companies, last quarter's better-than-expected earnings may have won the company a space on investors' buy lists as a primary beneficiary of an eventual turnaround.

Buying housing-related stocks now sounds like a great bottom-fishing idea, but hopes for a brewing turnaround might be too premature. We'll see.

21st-century grade school
K12, the online education provider for elementary, middle, and high schoolers, saw its shares soar this week on a positive earnings report. Revenue rose 59% for the quarter, though that mostly owed to a tax benefit. Still, student enrollment numbers soared more than 50%, and the company guided for higher yearly revenue, topping current analysts' expectations.

The company was a new IPO just last year, and it's actually selling at a higher price now. The market seems to be taking well to K12. Its efforts to offer online education services to children anywhere could really have a future, provided the company keeps its financial house in order.

Final thoughts
Stock prices always move higher for a reason. Sometimes that reason is just a short-term blip; other times, it materially affects the longer-term performance of a stock. Is a weekly stock movement a temporary fluke, or the signal of a new trend? Whatever the answer, the reason is almost always interesting.

What do you think about this week's movers? Speak your mind on Motley Fool CAPS. More than 115,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

La-Z-Boy is a Motley Fool Income Investor recommendation.

Fool contributor Tom Hutchinson holds no financial position in any companies mentioned. The Motley Fool has a disclosure policy.


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