Whoa! These Stocks Bucked the Tide

Well, last week was no fun. What started out on a high note just kept getting worse and ended with the Dow in danger of falling through the 13,000 mark. Economic danger signs at home and abroad weighed significantly on its performance. While the following stocks strapped on rocket packs, resist the urge to high-five everyone in the cubicles next to you. Smart investors won't celebrate until they know why their stock surged. 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? The markets fell 151 points or more than 1% last week, so stocks that went appreciably higher are pretty big deals. But let's see whether they're truly headed into orbit.

Stock

CAPS Rating (out of 5)

Friday's Change

Himax Technologies (Nasdaq: HIMX  ) **** 20.3%
OCZ Technology (Nasdaq: OCZ  ) *** 10.5%

Setting sights on growth
Chipmaker Himax Technologies reported preliminary results that surprised analysts and led to a surge in its stock. While everyone's had a dour outlook on the prospects for LCD screens, Himax says its chips that are used in LCD TVs, computer screens, and mobile handsets are selling faster than previously anticipated and its revenues, profits, and margins are all going to come in higher than it forecasted.

And market researchers across various sectors have been pretty scarce in suggesting that there's much growth ahead. IDC is looking at only modest growth in PC shipments this year, with the bulk occurring later this year as Microsoft and Intel unveil new products, and NPD Group predicts an 8% decline in sales in the LCD market by 2015.

Yet results by individual companies seem mixed. In addition to the brighter outlook by Himax, Applied Materials (Nasdaq: AMAT  ) said the mobile sector remains upbeat and new orders for semiconductor capital equipment were 53% higher sequentially. Corning (NYSE: GLW  ) , on the other hand, has been reducing its global capacity to adjust to slack LCD demand.

With 97% of the CAPS members weighing in on Himax believing it will outperform the broad market averages, it's crystal clear they think it will overcome any weakness present. Add the chipmaker to the Fool's free portfolio tracker to see whether it will keep bouncing, then tell us in the comments section below or on the Himax Technologies CAPS page whether it's set for the future.

Solid as a rock
Those busy researchers at IDC also say disk-drive shipments should see a surge in the second half of this year and then grow at a compounded 10% annual average for the next few years until 2016. Japan's nuclear disaster and Thailand's flooding caused shipments to fall 4.5% in 2011, but as the industry shifts toward more enterprise-level applications of the storage technology, it should enjoy the same kind of parabolic growth that hard disk drives witnessed.

As one of the leaders in SSDs, OCZ Technology is benefiting from the drop in NAND memory prices. Top NAND-flash memory developer Kingston Technology recently announced it was initiating across-the-board price cuts that should have other manufacturers following its lead. Further decreases in pricing should help push greater adoption of SSDs.

OCZ made an all-in wager on solid-state drives by abandoning the DRAM market and then doubling down by buying the system-on-a-chip design team from PLX Technology. But with STEC and early player in the sector and both Seagate Technology and Western Digital offering competing options, it's obviously a crowded space. OCZ's bounce on Friday, though, was probably a reaction to Thursday's drop, which the Fool's Anders Bylund had correctly called as overdone.

I picked OCZ as a stock to beat the market back in October, and though it has given up some of its recent gains, I still believe it will be a leader in the space. Tell me if you agree on the OCZ Technology CAPS page, and then add it to your Watchlist to see if whether remains a solid investment.

Going into orbit
These two companies may have divergent futures despite their short-term bounce, so check out for free the one stock The Motley Fool thinks will break all the rules to win. Hurry, though, because the free look at the new report, "Discover the Next Rule-Breaking Multibagger," is available for a limited time only.

Fool contributor Rich Duprey owns shares of Intel, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Microsoft, Western Digital, Corning, and Intel. Motley Fool newsletter services have recommended buying shares of Corning, Intel, and Microsoft and creating a bull call spread position in Microsoft. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On April 10, 2012, at 3:23 AM, salmonnegro wrote:

    Hi Rich,

    Remember that there was no trade on Friday. OCZ did not bounce on Friday, but on Thursday. The reason for the bounce was a conference call where the CEO announced several things: better margins going into next year, launch of new products ahead of schedule, and growing sales. So there were news regarding fundamentals. It was not a surge without fundamental basis.

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Related Tickers

7/23/2014 3:59 PM
HIMX $5.81 Down -0.25 -4.13%
Himax Technologies… CAPS Rating: ****
OCZ $0.00 Down +0.00 +0.00%
OCZ Technology Gro… CAPS Rating: **
AMAT $21.90 Down -0.62 -2.75%
Applied Materials,… CAPS Rating: ****
GLW $22.18 Up +0.01 +0.05%
Corning CAPS Rating: *****

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