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The reality of the lousy jobs report issued last week couldn't be concealed, no matter how hard the Bureau of Labor Statistics massaged the numbers, and the Dow finally fell through the 13,000 mark. While the stocks below 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? Yesterday the markets fell 130 points, or 1%, so stocks that went appreciably higher are pretty big deals. But let's see whether they're truly headed into orbit.
CAPS Rating (out of 5)
|National Bank of Greece (NYSE: NBG )||***||18.9%|
|SUPERVALU (NYSE: SVU )||***||15.2%|
Source: Motley Fool CAPS.
Your word is "bond"
I'd say it's only the most temporary of illusions, but because Greece saw sharply lower rates at an auction of six-month Treasury bills where it raised 1.3 billion euros, the markets forgave the teetering National Bank of Greece and sent shares higher. Just as in January, when Europe was ready to force austerity measures on the country in order to save it from itself, the fact that other bond sales -- notably Spain's -- came off worse allowed traders to bid up the stock.
But they still ignore at their own peril the crisis that simmers beneath the surface, and just as NBG was forced to suffer the ignominies of its government, Banco Santander (NYSE: STD ) is suffering the slings and arrows of the outrageous fortune of Spain. Its shares are down more than 20% from their February highs, but more than 40% lower than the peak they reached last July.
Having already rated National Bank of Greece to underperform on CAPS -- and, with no certainty that the concept of "too big to fail" is entrenched overseas as it is here, I believe it will ultimately fail -- I'll be maintaining my rating on the financial institution.
CAPS member chopchop0 doesn't expect Greece's willingness to accept orders from Germany to last long, so he foresees the financial institution falling in the disruption to follow:
Greeks are tiring of austerity and being Germany's whipping boy. While the majority of them support the euro now, additional austerity is going to make them clamor for the drachma. I predict an eventual exodus from the euro and return to the drachma in the next 6-12 months.
I suspect the run-up in its shares will dissipate soon enough (the stock's down more 6% in early trading), so add National Bank of Greece to the Fool's free portfolio tracker to see how long the euphoria lasts, and then tell us in the comments section below or on the National Bank of Greece CAPS page if you think this isn't a second wind, but rather a last gasp.
A real value?
When the bar is set low enough, being able to step over it becomes easy, and that's what happened yesterday with supermarket chain SUPERVALU, which posted better-than-forecast fourth-quarter results. The company was helped along by better inventory management and a lower-than-normal tax rate, but for a company in turnaround mode, the results were heartening.
Still, investors may wish to stay wary of an investment here. Sales fell 4.5% to $6.4 billion, and same-store sales were down nearly 2%. While it announced a net loss of $424 million for 2012, it expects to return to profitability next year, but with Target (NYSE: TGT ) moving to self-distribution, SUPERVALU is losing an important outlet. This is factored into SUPERVALU's depressed stock, but with Kroger (NYSE: KR ) or Safeway's financially stronger outfits, there doesn't seem to be a reason to back the truck up to SUPERVALU.
Despite SUPERVALU's troubles, the CAPS community remains supportive of its efforts, with 93% of those who weighed in believing it will successfully right its listing ship. Tell me if you agree on the SUPERVALU CAPS page, and then add it to your watchlist to see whether its forecasts are accurate.
Going into orbit
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