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 180,000-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 trading days:
CAPS Rating (out of 5)
Change Over Past Week
|Hanwha SolarOne (Nasdaq: HSOL )||**||(30.5%)|
|Jaguar Mining (NYSE: JAG )||***||36%|
|Global Education & Technology (Nasdaq: GEDU )||*||57.9%|
Source: Motley Fool CAPS. Percent change from Nov. 11 to Nov. 18.
Watching the sun go out
Not only has polysilicon wafer maker Hanwha SolarOne lost more than 30% of its value over the past week, its stock trades nearly 85% lower than it did at the beginning of the year. But the reason behind the value destruction is clear: Polysilicon prices have plummeted and there's no sign that they'll be on the rise anytime soon.
Indeed, producers of the key ingredient for solar power continue to pump out greater volumes, and LDK Solar (NYSE: LDK ) , the world's second largest manufacturer of wafers, will be tripling its capacity when it brings a new polysilicon facility online by the end of 2013. With governments globally cutting subsidies to the industry, demand for solar power has dropped like a rock, leading to falling prices. LDK, which had previously forecast profit margins between 11% and 16%, now says they'll likely be between negative 3.5% and 5%.
Even though Hanwha has lost so much of its value already, I just went over to CAPS and indicated my belief that there's still further for the poly-wafer maker to fall. Tell me in the comments section below or on the Hanwha SolarOne CAPS page if you think I'm wrong, then put the stock on your watchlist to keep track of its progress.
A tale of two stocks
Buyout offers were the catalysts propelling our other two companies higher, Jaguar Mining and Global Education & Technology. While the gold miner said it has received a number of bids in the past couple of weeks, the leading bidder according to The Wall Street Journal is China's government-owned Shandong Gold Group, which is willing to pay $1 billion, a 73% premium to the price the stock was trading at early last week.
It's an interesting development because earlier this month the miner's stock was capping a series of big moves higher despite some disappointing earnings news, wherein it reported lowered guidance for production. Someone saw a glittering opportunity here.
Equally noteworthy were the gains recorded by the Chinese English-language educator Global Education, because it was only announced this morning that it was getting taken out by British publishing giant Pearson (NYSE: PSO ) , so its biggest gains are actually coming today. The stock has almost doubled in value today, so what drove its gains last week? I found no published news reports to account for it rising so high.
While the Jaguar news is notable for the amount China is willing to pay for the miner, management says none of the talks with interested parties have moved beyond the exploratory stage. That probably helps account for the stock trading down today. Once there is a firm deal on the table, it might send the stock higher once again, which is what CAPS member ccatania13 is expecting.
Pearson, though, seems to be getting a good deal at a net cost of about $155 million for a company that trains Chinese students to speak English. Even after today's stock move, Global Education trades at less than a 10th of the market cap of New Oriental Education (NYSE: EDU ) , but analysts expect it to grow earnings by 38% next year compared to under 30% for its rival. However, long term, Wall Street is looking for New Oriental to churn out profits at a 30% clip annually, while only expecting Global to do so at about half that rate.
But last year the only CAPS member willing to weigh in on the educator's prospects, Peterabit, figured that since there were mandates in place for Chinese to learn English, this was a good bet to go with: "China's gov. is making everyone learn the english language, this plays very well for GEDU."
So did someone have early knowledge of these two deals, which helped propel their stocks higher prior to the formal announcement? Add Jaguar Mining and Global Education & Technology to your watchlist and see how it all plays out.