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 upward leap 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, and see whether they're truly headed into orbit.

Concerns over the country's economic health and the continued pullback in commodities caused stocks to tumble 100 points on Friday, or almost 1%, so stocks that went significantly higher are pretty big deals.

New frontiers in investing
Liquid natural gas producer Cheniere Energy needed some good news. After Cheniere started the year with some big gains, a note-holding hedge fund operator accused the company of effectively defaulting on its debt, saying that payments between Cheniere, its subsidiary Cheniere Energy Partners, and its Sabine Pass liquefaction facility were not revenues under GAAP reporting requirements. Cheniere has sued the hedge fund.

Then, earlier this month, Standard & Poor's downgraded Cheniere's outlook from "developing" to "negative," because it said the LNG company would likely come up short of its cash needs by May 2012, when it would have to start making principle payments on its debt.

So the word last week that the Department of Energy had approved Cheniere's export application was welcome news indeed. It makes Cheniere the first such company to get export approval in more than 40 years.

While that's a happy development, it doesn't change the concerns that S&P raised. Since the facility that Cheniere needs to build to handle the exports won't be operational until 2015, the company will still need to monetize its assets. I think "volatility" will remain Cheniere's watchword for some time to come.

CAPS member EugeneZ isn't convinced on the viability of Cheniere's proposed export business, and worries that the debt issue will swamp it before then anyway:

I do not believe in shale gas-to-LNG story played out on the Atlantic shore, neither I believe in the viability of re-export of LNG - you will boil-off all your spread in the process of doing so :( Plus, these guys have some debt they have to deal with next year or so - without a solid cash flow that may be quite hard...

Cheniere partisans will likely defend the LNG producer regardless, but you can let us know on the Cheniere Energy CAPS page whether this gives it a new lease on life.

Not an uncommon occurrence
Is Barnes & Noble worth $1 billion? The bricks-and-mortar model for bookselling is definitely under attack, first from Amazon.com's (Nasdaq: AMZN) online distribution model but also from digital downloads. Every book Amazon ships, and every e-book that users download to a Kindle or Sony's Nook is one less hardcover B&N would have sold.

Unlike my Foolish colleague Rick Munarriz, I don't think the days of the physical book or the bookstore are doomed. They might be significantly diminished, but I'll never warm up to a digital copy of a book, and the immediacy of strolling through stacks of books can't be replaced by digitally scrolling through a book list. With that in mind, is Barnes & Noble worth the $1 billion Liberty Media has bid for it?

While the Nook might be losing money now, the app store, in-page videos, and email enhancements B&N has added make it very similar to a tablet PC. At just $249, that becomes very attractive. And maybe it's because my daughters have color Nooks (and love 'em!), but I hear more buzz about those devices than I do about Kindles. I'm thinking John Malone just might be smarter than he's being given credit for here.

CAPS member usmcj80 apparently feels the same about books as I do, but sides with Rick in thinking that Barnes & Noble can't survive the digital onslaught. Write up your own thoughts on whether B&N investors should get while the getting's good on the Barnes & Noble CAPS page.

Making a connection
We know the admonition by now. Insiders can sell stock for any reason, but they usually only buy them for one: They think the price is going up. Thus, reports that the CEO and COO of STEC bought a combined $6.4 million worth of the solid-state drive maker's stock sent shares into orbit. Despite tough competition from Seagate Technology (NYSE: STX) and Western Digital (NYSE: WDC), plus the acquisition of drive maker Pliant by SanDisk (Nasdaq: SNDK), there's a point where STEC's stock just becomes too cheap to ignore.

Shares are off more than 35% from February's most recent highs, even after the bounce the stock got Friday. Yet even that discounted value still leaves those shares looking a little pricey. Nonetheless, 92% of the CAPS members rating STEC think it will outperform the broad market averages. You can stay on top of the company's developments by adding the drive maker to the Fool's free portfolio tracker.

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 and beyond.