3 Stocks Shaking the Market

Some stocks are one-hit wonders, making a big splash when they first appear, then quickly fizzling into obscurity or oblivion. But for other stocks, that initial big move is only a preview for even bigger and better gains to come.

Today, we've listed three stocks that made some of the biggest upward moves over the past month, which we'll pair with the ratings issued by our Motley Fool CAPS community. The higher each stock's rating, the greater CAPS members' faith in that company's ability to keep on beating the market.

Stock

1 Month  % Change

CAPS Rating 
(out of 5)

Magic Software (Nasdaq: MGIC  )

90.3%

**

Exelixis (Nasdaq: EXEL  )

86%

****

Local.com (Nasdaq: LOCM  )

63.6%

****

1 month % change from Nov. 17 to Dec. 17.

As the markets whipsaw to changes in changes to second half economic performance, the S&P 500 has been volatile. So before we get shaken out again, let's see why the CAPS community thinks some of these companies might continue to outperform the market.

A mighty temblor
Looking at just the 90% gains relatively unknown business software provider Magic Software achieved in just the past month is certainly impressive, but that's just part of a much broader climb it has made since the beginning of November when it was trading for less than $3 a stub. In short, when you look at the past year Magic's shares have nearly quadrupled in value (as of this writing, however, Magic's shares are falling 10% today).

Building on its position as an IBM (NYSE: IBM  ) software partner, Magic's uniPaaS and iBOLT platforms allows businesses to rapidly customize and integrate applications into existing systems. Revenue soared 66% last quarter and was up 24% sequentially, and operating profit tripled.

With 87% of CAPS members rating Magic to outperform the broad market averages, they undoubtedly think it can pull additional growth out of a hat. Tell us on the Magic Software CAPS page why this performance is not just smoke and mirrors.

A sunny disposition
Some stocks can have a breakout performance one month and then go back to their money-losing ways. Contrast that with biotech Exelixis, which busted higher in mid-November on news of positive mid-stage trials on its ovarian and prostate cancer therapy. But that was only the launching pad for its next surge up, as rumors of a possible buyout from some Big Pharma player took it to the next level.

That would be a nice change of fortune for the biotech, which admittedly has been losing money and burning cash. Partnerships with Bristol-Myers Squibb (NYSE: BMY  ) and GlaxoSmithKline (NYSE: GSK  ) turned into big disappointments, and while recent insider buying has instilled a level of confidence in investors, there is a lot of risk here. As positive as the drug development news is, it's still only in mid-stage trials, and there are plenty of potholes it could run into yet.

Highly rated CAPS All-Star member zzlangerhans recently weighed in with the view the market cap the market is assigning Exelixis may be hard to maintain for the long term.

The cap is back to 900M and shareholder equity is -200M, meaning that the market is valuing the pipeline over a billion dollars. Exelixis has had a lot of trouble maintaining this level of enthusiasm before and it won't take much to let some air out of this balloon. There are more trials in progress than I'm aware of, but this is a cap that will have to be supported by ongoing positive data and that's a hard trick to pull off.

You can follow along with Exelixis's cancer treatment promise by adding the stock to your watchlist and having all the Foolish news and analysis gathered together for you in one place.

A speedy opportunity
With local search provider Local.com, the gains it's made in recent weeks unfortunately has less to do with its own operations than with Google (Nasdaq: GOOG  ) tossing $6 billion at Groupon. When someone's willing to pay that kind of cash for local search, every provider including Local.com, is going to look pretty darn attractive. There's often a lemming-like quality to M&A announcements as others with cash burning a hole in their pocket look for some to throw money at.

Of course, that raises the question, why not Local.com? Well, it did miss analyst expectations on third-quarter sales and profit, and projections for fourth-quarter revenue and earnings were light too. With a market cap of around $100 million, Local.com wouldn't cost the anything near the $6 billion offer that Google made for Groupon. There's plenty of competition out there and bidding up shares based on hope is hardly a worthwhile strategy to pursue.

Yet 94% of the CAPS members rating Local.com think it has significant value locked within, so be sure to add it into the Fool's free portfolio tracker. The head over to the Local.com CAPS page and search the comments of your fellow Fools for greater insight.

Shake, rattle, and roll
With these stocks shaking the market this past month it pays to start your own research on them at Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made all from a stock's CAPS page.

Google is a Motley Fool Inside Value recommendation. Exelixis and Google are Motley Fool Rule Breakers choices. GlaxoSmithKline is a Motley Fool Global Gains recommendation. The Fool owns shares of and has written covered calls on GlaxoSmithKline. The Fool owns shares of Exelixis, Google, and International Business Machines. 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.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. You can shake, rattle, and roll The Motley Fool's disclosure policy, but it still won't break.


Read/Post Comments (1) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 21, 2010, at 1:49 PM, sdnayak wrote:

    Hello,

    A few years ago you were touting this company "EXEL" as the next Genentech and one of the future bagger!! But I am surprised to see you unfavorable comment many times with EXEL. That's very surprising and confusing!!! Not sure about your change of tone......

    -- SDN

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