Whoa! What Just Happened to My Stock?

Resist the urge to high-five everyone in the cubicles next to you. Your stock may have just strapped on a rocket pack and taken off for the Moon, but smart investors won't celebrate until they know that leap up was justified. Without a fundamental basis for the bounce, these stocks can quickly make the return trip down.

Is now the time to lock in profits, or is this just the first step toward even higher valuations down the road? Let's examine several stocks that just hit the afterburners to see whether they're truly headed into orbit.

Stock

CAPS Rating 
(out of 5)

Monday's Change

Gramercy Capital (NYSE: GKK  ) ** 20.8%
Cheneire Energy (AMEX: LNG  ) ** 16.3%
YM BioSciences (AMEX: YMI  ) ** 15%

The market decided to begin the year with a bang, jumping nearly a full percentage point. Yet stocks that went up significantly more are still big deals.

The devil's in the details
There was apparently no real reason for commercial real estate finance and property investment company Gramercy Capital to take off yesterday. Last week, the company completed the sale of some real estate investments to SL Green (NYSE: SLG  ) that put some unrestricted cash in its pocket, but that hardly seems worthy of a 20% run-up in the price.

Regardless of the reasons behind the move, Gramercy Capital put itself in a better financial position by selling off those non-controlling interests. It got to deleverage its balance sheet while boosting its liquidity. The deal was worth $391 million to the real estate investment trust, which included the assumption of more than $265 million worth of debt.

The Motley Fool CAPS community is certainly behind Gramercy Capital, with 96% of the CAPS members rating it believing it will beat the market. That sentiment goes for Wall Street, too, where all of the six analysts following the REIT see it outperforming.

Tell us what you think on the Gramercy Capital CAPS page.

Making it to the big time
Liquefied natural gas transporter Cheniere Energy rose significantly higher yesterday, also on little or no news. Last month, Canada's biggest natural gas producer, Encana (NYSE: ECA  ) , endorsed Cheniere Energy's plans to export LNG abroad from its Sabine Pass facility in Louisiana; Cheniere Energy's deal to ship LNG to China from there back in November led to a big increase in the stock price then.

That development of its liquefaction facilities has CAPS members like brooklyn91941 believing international growth could be the next big catalyst.

With the continued construction of deep water LNG terminals which will […] export LNG to Asia. This company will benefit greatly

You can watch as Cheniere Energy develops by adding the stock to your watchlist and having all the Foolish news and analysis about it gathered in one place.

A squeeze
Maybe it was just the euphoria of the new year, but YM BioSciences also moved higher on no news. Or maybe some short-sellers decided it was a good time to head for the exits. In November, YM BioSciences investors enjoyed a quick, 20% increase in the share price as shorts were squeezed, but since then the number of shares short has grown even larger. In the latest reporting period, stock sold short rose by 40% to 2.4 million shares.

CAPS All-Star and biotech follower zzlangerhans predicted that YM BioSciences would take a hit after a dilutive offering of 40 million shares last month, and while it initially weighed on the stock, it hasn't been enough to hold back enthusiasm for the positive results the company reported on its Janus kinase inhibitor CYT387 for myelofibrosis. Novartis (NYSE: NVS  ) is investigating this space, too, as is Incyte (Nasdaq: INCY  ) . Who has the best compound, though, remains to be seen.

Health careGuy says investors should look at how Incyte is progressing to guess at what YM BioSciences will do.

At only $200mm [enterprise value], this has a lot of room to run before ASCO in June, where the company will present full [phase] 1/2 data on CYT387, when the anemia reduction claim could be further validated. Given that INCY received $1B for partnering their JAK programs, and YMI's drug is unpartnered, people will be playing for the takeout.

Going into orbit
That's why it pays to start your own research on these stocks on Motley Fool CAPS, where you can read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from the stock's CAPS page. Then you can decide for yourself whether your stock's headed for re-entry, or off to infinity or beyond.

Novartis is a Motley Fool Global Gains pick. 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. The Motley Fool has a disclosure policy.


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