You saw the headlines. You know your stock price made a big move. But what does that portend for your investment's future?
By pairing the latest news with the collective wisdom of our 170,000-strong Motley Fool CAPS investing community, we might be able to discover whether your stock's latest exploits are a short-term hiccup or the start of a much bigger trend.
The following stocks have all made big moves over the past five days:
CAPS Rating (out of 5)
Change Past Week
|Rubicon Minerals (NYSE: RBY )||****||(20.1%)|
|SemiLEDS (Nasdaq: LEDS )||***||(18.7%)|
|Pandora Media (NYSE: P )||*||31.2%|
Source: Motley Fool CAPS, % change May 11-18.
Can't fight this fire
No doubt the new preliminary economic assessment Rubicon Minerals issued on its Red Lake district F2 project is good by most counts, as it achieves a pre-tax internal rate of return of 28% with gold at $1,100 an ounce. And if gold is at $1.500 per ounce, it's even better, with an IRR of 48% over the expected 12-year life of the mine. But in comparison with initial estimates, and apparently even the revised ones, the news left the market cold and the stock plummeted 23% just yesterday alone.
CAPS member Jbay76 says the company hired to do the PEA was deliberately cautious, perhaps as a means of avoiding what happened last time. Yet even with these lower numbers, the project could pay itself off within two years.
I do not think it's a credibility gap. The company hired to do the PEA admits that they were conservative in what numbers they used to complete the report. Maybe this is so that they do not have to resubmit the PEA the way they had to resubmit the NI-43101 earlier in the year due to the model used originally.
Does this make a buyout by Goldcorp (NYSE: GG ) or someone else the last best hope for investors? Some might hope so, but with 98% of those CAPS members rating Rubicon thinking it can still outperform the market averages, it seems they're looking for it to remain a standalone company.
Find additional nuggets of wisdom over on the Rubicon Minerals CAPS page and let us know why you think the miner is worth its weight in gold.
A bright spot
The inventory glut pressuring LED makers Cree (Nasdaq: CREE ) and SemiLEDS doesn't appear to be letting up anytime soon, as some analysts think pricing will continue to gut margins. Analysts at Morgan Stanley say Cree in particular is in danger because it needs to cut prices to keep from losing market share, though that's not a widely held opinion. But earlier this year, Cree itself had said something similar as pricing issues led to a disappointing quarter.
It was a case of poor timing for SemiLEDs, which went public earlier this year right in the middle of the industry realignment. Its own earnings reports haven't exactly been encouraging to investors, either, with one disappointment after another in its short time in the public's eye. If industry leader Cree is seen as facing high hurdles, what of SemiLEDS, particularly if one venture-capital firm is right that LED pricing is set to tumble 90% by 2015?
While lower prices are key to broader adoption of LEDs, it will be hell on margins for operators in the space. But CAPS All-Star member Calinvestments thinks if the market can turn around, the rising tide will lift SemiLEDS boat: "This is a small/mid cap high growth stock that should outperform the S&P during a bull market."
Tuning in, turning on
I have a problem thinking that the value increase Pandora Media has enjoyed will last. It's something of a cool service, though limiting, but it's going to have a heckuva time competing against the likes of Apple (Nasdaq: AAPL ) or Sirius XM Radio (Nasdaq: SIRI ) . OK, maybe it can surpass the latter, particularly as it enjoys a rocketing subscriber base, but structural costs look like they'll keep it from ever becoming more than just an interesting sideshow.
The CAPS community isn't all that enamored, either, with more than three quarters of those rating the Internet radio service saying it will underperform the broad market averages.
Even so, some investors think Pandora has the same vibe that Apple holds for its core customers. GudDanMan says it's not the technology the people are buying here but the smarts to know what people want.
I think Pandora is a winner, not because of technology, timing, contracts or ad revenue, Similar to Apple, Netflix, Google and few other companies like this, they seem to know how to please customers. Their ability to please means the management knows what they are doing, and if there is great management, they know how to make the right decisions at the right time. Invest in people, not technologies.
Pandora is so new to the market that it still has that new-car smell, so there might not be enough to go on yet to judge its future. Instead, add the stock to the Fool's free portfolio tracker to see whether investors are tuning in to its future.