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.

Stock

CAPS Rating (out of 5)

Friday's Change

Insmed (Nasdaq: INSM)

**

16.0%

Deer Consumer Products (Nasdaq: DEER)

*

10.3%

Yongye International (Nasdaq: YONG)

***

9.9%

The economic data released last week confirmed what many people already knew: The economy remains in a dire condition. The markets fell more than 97 points, or almost 1%, as fewer jobs are being created and unemployment is ticking higher again, although the service sector is showing some strength. So stocks that went significantly higher are pretty big deals.

The short story
This is turning out to be a very good year for Insmed after all. It started off rather rocky, with having to effect a 1-for-10 reverse stock split to maintain Nasdaq exchange compliance, but then it got approval to start phase 3 clinical trials for its lung-infection therapy Arikace, which had some investors hoping it would become a possible takeover candidate after Merck (NYSE: MRK) agreed to buy Inspire Pharmaceuticals.

That particular rumor might get a new workout in the wake of Insmed's phase 2 Arikace report indicating that patients showed statistically significant improvement in lung function over a 72-week period.

This should be a no-brainer for the FDA. Although the regulatory agency considers Arikace to be a new chemical entity because of Insmed's proprietary technology for delivering drugs directly to the lungs, the key active ingredient is amikacin, a previously FDA-approved antibiotic. Seems so long as the delivery technology continues to be proved efficacious, it should get approval without much trouble. If that happens, it will be targeting a large $1 billion orphan market for patients with cystic fibrosis.

However, CAPS All-Star zzlangerhans thinks the rumor mill is wrong and that it's a bit premature to be thinking about all the riches Insmed will be raking in.

Anything is possible I suppose, but we're now years away from the great day when Merck bought Insmed's biosimilars business for 130M. The current pipeline has nothing to do with biosimilars or even Iplex, Insmed's other older developmental program. I can't see why Arikace would be tempting to big pharma, given that it is a niche antibiotic years away from commercialization.

Breathe deep and share your opinion on the Insmed CAPS page, and follow its progress by adding the biotech to the Fool's free portfolio tracker.

Oh, dear!
There was no special news that drove Chinese kitchen-gadget maker Deer Consumer Products higher, although there was some Internet discussion-board suggestion that it might be a short squeeze at work, as almost 13% of the float is sold short.

Since being accused of being a fraud this past March, Deer has been a volatile stock. Yet it was able to overcome those concerns and reported that first-quarter revenues soared 45%. That might seem an incredible achievement to some, particularly those cautious about Chinese investments these days, but it's possible the numbers are real. As Best Buy found out, the Chinese retail market is different than the one here at home.

Here in the United States, a retailer is generally agnostic when it comes to pushing products; in China, however, the stores have manufacturer salesmen on the premises pushing their products. Analysts contend that was one of the reasons Best Buy was forced to abandon the market with its namesake stores and was focusing instead on its Five Star brand. Deer said it's looking to have about 1,000 in-store personnel pushing its products this year.

The number of CAPS members doubting Deer can beat the market has risen substantially in recent months. Back in March, less than a third had concerns, while today nearly 50% think it will underperform the broad indexes. Stay on top of Deer's developments by adding it to your watchlist.

Yearning for Yongye
There was also nothing particular causing Yongye International, another small-cap Chinese reverse-merger stock reeling from accusations of fraud, to jump higher. At the start of the month, Morgan Stanley (NYSE: MS) gave it a jolt of confidence by buying a big stake in the fertilizer maker, and many investors took heart that the conversion price of the preferred shares was $8.80, well above the $5 or so it was trading at.

Yet as the Fool's Matt Koppenheffer points out, the liquidation price is there, too, so if Yongye ends up collapsing, it gets paid that amount before common shareholders start to get anything of whatever might be left. Morgan Stanley covered itself regardless of which way the stock goes, something individual investors would have a hard time matching.

Not that it's much comfort to Yongye investors, since after the initial bounce it got from Morgan, the stock cratered again. But China Green Agriculture (NYSE: CGA) shares are also in the dumps, down even more from their 52-week high than Yongye is. That's hardly a reason to take a stake now, though.

Throw your brickbats down in the comments section below and bring your analysis to the Yongye International CAPS page.

Going into orbit
It pays to start your own research on these stocks onĀ 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.