There were a lot of stocks racing higher Friday after the Dow Jones Industrial Average surged 277 points, or 2.2%, after Germany caved to demands from Italy and Spain to be bailed out or face the prospect of their blocking "everything."
Some companies managed to jump higher by double-digit rates. But resist the urge to high-five everyone in the cubicles next to you, since 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.
Friday's % Chg.
|Smith & Wesson Holding (Nasdaq: SWHC )||20.5%||$8.31||***|
|ValueClick (Nasdaq: VCLK )||16.2%||$16.39||**|
|TIBCO Software (Nasdaq: TIBX )||11.5%||$29.92||****|
|National Bank of Greece (NYSE: NBG )||11.8%||$1.71||***|
|Samson Oil & Gas (NYSE: SSN )||11.2%||$1.10||***|
On the up and up
With a new wave of bailouts soon to be washing over Europe, it's not surprising to see National Bank of Greece running higher. It's undoubtedly hoping some will trickle down its way, and it needs every drachma it can scrape together as bad loans have quadrupled over the past four years and it is being forced to sell off profitable units to raise cash. Greece's largest bank should be avoided like the plague, despite inevitable bounces higher, such as Friday's.
Also bounding higher was Internet ad agency ValueClick, which I had suggested last month was poised to take off. Shares had been beaten down after a poorly received first-quarter earnings report that gave guidance below analyst expectations, but I noted its media segment seemed particularly healthy, as revenues had doubled. Considering the segment represents nearly half of consolidated revenues, I thought the market had unfairly beaten down the stock.
As expected, ValueClick said Friday that second-quarter revenues would come in at the high end of its previous guidance based on the strength of that media market. I had rated the ad agency to outperform on CAPS, and though it's still lagging the indexes at the moment, I see ValueClick eventually surpassing them.
A strong second quarter also sent shares of Smith & Wesson Holding higher. While the song says "send lawyers, guns, and money," it's the guns they're sending now as sales surged 28% and the company provided guidance that beat expectations. This really shouldn't have come as such a surprise, though, as both Smith & Wesson and fellow gunslinger Sturm, Ruger have been shooting out the lights lately. I recently noted Smith & Wesson's preliminary firearms order backlog more than doubled while Ruger has been unable to keep up with demand and actually had to stop taking orders. I expect them to continue hitting the bull's-eye.
More good earnings news accounted for TIBCO Software's rise. The cloud-computing software specialist was able to overcome the global financial crises that have impaired IT spending at other software providers, reporting stronger-than-expected results, with analysts speculating it's because TIBCO solutions allow enterprises to store and access data over the Internet without needing to buy redundant equipment. But not everything came off without a hitch as its largest segment, the Americas, fell behind Europe and Asia, resulting in the division's president getting ousted. Considering Europe's troubles and TIBCO's performance, this should be a relatively easy fix to get the U.S. back online.
In the flow
Not so easy might be Samson Oil & Gas, though it seemed to benefit from putting out an advisory update on its wells on the same day that oil prices exploded. As news of the new deal to bail out more countries spread, Brent oil surged 6% to over $96 a barrel.
Samson fortuitously said it's been pumping some oil out of its wells, the same ones about which its previous update had caused the stock to plunge. But while oil is trickling out of most of its wells, at least one was doing well. Samson said its Abercrombie well produced at an average oil rate over the past week of 350 barrels of oil per day. Considering the market hadn't been expecting the driller to be producing much of anything, this was good news.
Samson has assets in some of this country's most promising oil and gas regions, so the prospects for a quick recovery are good. Oil now accounts for 70% of Samson's production, and having paid off its debt it should be in a better position to maneuver.
More than 300 CAPS members have weighed in on Samson on CAPS, and 93% of them -- myself included -- think it will end up outperforming the broad market averages. With the stock now swinging higher, tell me in the comments section below or on the Samson Oil & Gas CAPS page how much more oil you think it will end up pumping.
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