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 all made big moves last week:
CAPS Rating (out of 5)
Change Past Week
|Eastman Kodak (NYSE: EK )||*||(43.1%)|
|Dendreon (Nasdaq: DNDN )||***||62.5%|
|Rare Element Resources (NYSE: REE )||*||77.2%|
Source: Motley Fool CAPS, percent change from Dec. 30 to Jan. 6.
6 feet down
It was really just a matter of time. Despite protests to the contrary, it was evident to most investors watching Eastman Kodak's tremors that it was actually suffering the onset of death throes. Admittedly, it clung to life longer than I anticipated it would when I nominated it for the worst stock award for 2010, but like zombies, sometimes companies don't know they're dead yet. I was just early.
CEO Antonio Perez holds the distinction of driving this once-iconic company straight into its grave while clinging to a failed strategy of surviving on one-time cash infusions from Kodak's patent portfolio. Now the vultures are circling as Kodak faces a New York Stock Exchange delisting warning and is rumored to be readying its bankruptcy paperwork.
Although CAPS All-Stars were almost evenly split on its ability to be resuscitated, perhaps on the belief its patent portfolio could save it, it seems to have become cheaper for companies to wait for it to go under and pick at the bones in bankruptcy court than to pay a premium for them now.
You can put Eastman Kodak on your watchlist if for no other reason than to be alerted when the final death dirge is played.
Biotech Dendreon came crashing down like a house of cards after a problem-plagued launch of its cancer drug Provenge. A "buy and bill" method of reimbursement was enough of a stumbling block that even Medicare's decision to reimburse doctors for the drug couldn't be surmounted. Then, when the company warned that sales were going to be slack in the second half of the year, it did nothing to restore confidence.
Yet investors gained some hope as Dendreon reported better-than-expected sales for the fourth quarter, though with growth declining from last quarter's 30% rate, it still aligns with management's previous assertion that sales would be "modest."
The same, but different
After being battered by China's decision to relent a little on the stranglehold it has on rare-earth elements, Rare Element Resources rocketed higher after reporting new mineral resource estimates for its Bear Lodge, Wyo., project that suggest higher grades of ore will be found there. While that's causing investors to bid up the stock, I still recommend being cautious about this company.
Bear Lodge had four decades of exploration conducted on it by notable names such as Hecla Mining, as well as Rare Elements peer Molycorp. All of them subsequently abandoned their efforts there. Moreover, the report is just an interim report -- the full one is due by the end of the second quarter -- and it contains less than half of the new assay results from 2011's drill program. Investors in Rubicon Minerals will remember the sobering disappointment that greeted its revised mineral resources report after initial findings suggested huge reserves.
I'll be maintaining my underperform rating on CAPS for Rare Element Resources, but add the stock to the Fools' free portfolio tracker for updates when the revised report is released.
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