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 whether 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)
|
Monday's Change
|
| Qiao Xing Universal Resources (Nasdaq: XING ) |
**
|
29.1%
|
| Taomee Holdings (Nasdaq: TAOM ) |
NR
|
20.2%
|
| Ener1 (NYSE: HEV ) |
*
|
14.1%
|
NR = not rated.
With the Greek bailout only a stopgap measure and fears of a default contagion spreading to the rest of Europe, the market dropped 151 points yesterday, or 1.2%. So stocks that went significantly higher are pretty big deals.
Digging in the dirt
Hope springs eternal for investors in Qiao Xing Universal Resources, a mobile handset-cum-metals miner in China. After the bid to buy Qiao Xing Mobile (NYSE: QXM ) fell through when the board couldn't scratch up a quorum to vote on the measure (what?!), it shelved the bid permanently and turned its attention to being a miner.
Qiao Xing's mining operations -- the resource company, not the mobile operator, though the resource company still has legacy mobile communications in its pedigree (confused yet?) -- decided to buy up a molybdenum mine or two, presumably because that is hot now.
But all this occurred at the end of last year and earlier this year. The catalyst for yesterday's jump seems to be that it finally filed its annual report with the SEC on Friday, but the information contained in there is for the period ending Dec. 31 of last year. Hardly fresh news, and investors had a taste of what was in the offering when it released a limited quarterly report back in May. That also got its stock jumping for a brief minute, before shares started their decline again.
While 93% of the 561 CAPS members rating Qiao Xing Universal Resources think it will be able to make a go of it as a successful miner, I've cast my lot with those who think the company is run by and for the profit of the controlling chairman and CEO, Rui Lin Wu. And the two-star rating CAPS has given it suggests that members think there are better places for your money, too.
Dig up some additional thoughts on the Qiao Xing Universal Resources CAPS page and follow its progress by adding the miner to the Fool's free portfolio tracker.
Don't bank on it yet
Overcoming jitters about accounting irregularities at Chinese small caps, children's entertainment company Taomee Holdings surged on no particular news, though a positive article about it appeared on Seeking Alpha late in the day on Friday.
The company just had its IPO last month, but it stumbled badly out of the gate as it reported deficiencies in its financial controls. It operates a web of media outlets that caters to kids, including a website, books and magazines, and licensing of its characters to consumer-products companies. It most recently expanded to TV and film, making it natural to think of Taomee as a Chinese version of Hasbro or Disney (NYSE: DIS ) , with the former also just starting to make its own movies and TV shows.
Yet I'm not so certain it's as easy as all that to set up a media and entertainment company and easily succeed. Taomee has a very short operating history, and while Hasbro, with all the muscle of a strong portfolio of brands behind it, is finding being a TV-show producer a go-slow business. Even Disney runs into periods of sloth at times.
I've marked Taomee to underperform the markets and would wait to see whether it can be as big as it claims. Right now, the stock has only a handful of members weighing in, so it hasn't yet garnered a rating. Why not head over to the Taomee Holdings CAPS page and give us your thoughts on whether its kid-centric focus will pay off?
You can also add it to your watchlist to keep tabs on whatever developments might crop up as a result of its debut.
Chemically bonding
Despite all the highfalutin talk going on about electrifying vehicles, much of the car-buying public just isn't all that interested. Nissan has sold a little more than 4,100 all-electric Leafs so far this year, and General Motors' Volt has driven just 2,745 cars off the lot. Not exactly the green future we were promised, which doesn't bode well for lithium-ion battery makers such as Ener1, A123 Systems (Nasdaq: AONE ) , and Valence Technology (Nasdaq: VLNC ) .
But Ener1 got a jolt by announcing that the Chinese government gave it the green light to start a joint venture with an electric-vehicle maker for the Chinese market to co-manufacture energy-storage systems. Not that government endorsement is a guarantee for success. U.S.-based Green Vehicles just went belly-up, despite getting lots of support from the taxpayers of Salinas, Calif., while Ener1 earlier this year severed ties with the Norwegian Th!nk Global EV car company that went on to declare bankruptcy.
That might explain why only two-thirds of the CAPS members rating Ener1 think it can beat the market. However, CAPS member pcarsten thinks its status as a government golden child will save it from itself. How about you? Let us know in the comments section below or on the Ener1 CAPS page whether you think it can electrify the future.
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.
RSS Headlines
Fool UK