Whoa! What Just Happened to My Stock?

The market has been trending higher since the year started, and yesterday took a good tick upwards -- although not everyone went along for the ride. So your stock may have strapped on a rocket pack and shot higher, resist the urge to high-five everyone in the cubicles next to you. 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 two stocks that just hit the afterburners, and see whether they're truly headed into orbit:

The markets jumped almost 100 points yesterday, or almost 1%, so stocks that went appreciably higher are pretty big deals.

When you're hot, you're hot
Shares of biotech Medivation are undergoing yet another round of levitation as results just published revealed its experimental oral prostate-cancer drug MDV3100 continued to be well tolerated in phase 3 clinical trials. Last November it said that when taken orally, MDV3100 helped patients live an average of five months longer than a placebo while causing only mild side effects.

With the potential for hitting the market with its product sooner rather than later, Medivation may be able to capitalize on Dendreon's (Nasdaq: DNDN) problem of declining expectations for growth for its prostate cancer treatment. And because Exelixis is not going to have any shortcuts to market for cabozantinib, Medivation is poised for serious growth.

Of course, there's still the FDA standing athwart the gateway and it will need to navigate that minefield, and that's what has CAPS member campwt00global cautious about Medivation's lofty valuation:

Big pop and move up this year ... like 300% 12 months ... think this is due a leg down while the dust settles on the FDA.

Add the biotech to the Fool's free portfolio tracker and tell us on the Medivation CAPS page if you think it will prevail before the regulatory agency.

Sunny skies
The flooding in Thailand is going to start inundating the earnings reports of tech companies as supply issues really come to the fore in the PC industry. According to the market researchers at IDC, Thailand accounts for 40% of the world's disk drives, with a quarter of worldwide production affected by the floods. Sound specialist Dolby Labs (NYSE: DLB) says the impact is baked into its unit shipment forecasts and drive maker Western Digital (NYSE: WDC) was sunk as a result of the supply constraints engendered by the floods.

Compare that to the story at Seagate Technology, which has largely remained above the fray and the floodwaters, as most of its operations remained unaffected by the disaster. That showed up in its earnings report, where it enjoyed the higher drive prices being realized from the shortages. It just bought Samsung's hard-drive business and says customers want to lock in supply with long-term contracts.

Those factors are likely behind why 92% of the more than 1,100 CAPS members rating the drive maker to outperform the broad indexes. Tell me in the comments section below or on the Seagate Technology CAPS page whether you agree, then add the stock to your Watchlist to see how it all plays out

Going into orbit
These three companies may have divergent futures despite their short-term bounce, so check out two companies the Motley Fool thinks have a can't-fail future. Hurry, though, because the look is free – but for a limited time only.