Having parsed Ben Bernanke's speech within seconds of its release, the market plunged 100 points on Friday, only to rebound just as quickly when it was realized that maybe what he said wasn't all that bad. The market rose more than 150 points from trough to peak and finished out the day 90 points higher -- a roller coaster ride for the potential promise of more quantitative easing. Yet some stocks were even more euphoric, rising by double-digit percentages.
But 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, because without a fundamental basis for the bounce, these stocks could just as quickly make the return trip down.
CAPS Rating (out of 5)
|Splunk (Nasdaq: SPLK )
|Thompson Creek Metals (NYSE: TC )
|Great Panther Silver (NYSE: GPL )
Not as rich as you think
According to the market analysts at IDC, big-data technology and services will grow from a sleepy $3 billion business in 2010 to almost $17 billion by 2015 -- a 40% compounded annual growth rate. Recent IPO Splunk went public based on just that sort of growth trajectory, offering services to help companies process huge amounts of data in real time. Its second-quarter results underscored the belief that "big data" is the newest technological revolution that's changing the face of business.
According to IBM, we create 2.5 quintillion bytes of data every single day. In fact, helping businesses get a handle on the information flowing into their operations is becoming one of the cornerstones of its future growth plays. Big Blue's business analytics division saw revenue jump 28% last quarter, making it the company's fastest-growing segment.
While that could be Splunk's biggest hurdle -- fighting off large, well-financed rivals like IBM and EMC (NYSE: EMC ) -- the field is so new and fast-growing that it can support numerous companies entering it, such as TIBCO Software (Nasdaq: TIBX ) , which recently made a concerted effort to break through.
I had rated Splunk to underperform the markets on Motley Fool CAPS only because of the audacious jump it made at its IPO. I'll be closing out that CAPScall now with a small gain, and I expect we'll see Splunk exhibiting some real spunk as the market for its services grows.
A torrent of riches
My outperform rating on Thompson Creek Metals on CAPS will stand, however, because the position was taken with a long-term view of its potential. Earlier this year the molybdenum miner diluted the heck out of shareholders with a $200 million rights offering, along with the sale of 8 million tangible equity units that will automatically settle in three years for shares of common stock. While that might have justified short sellers attacking the stock, the long-term thesis for it as a winning investment remains.
Its Mount Milligan project has an estimated 6 million ounces of gold sitting on top of 2.1 billion pounds of copper. No doubt is has issues it must address, but when everything comes due, it's expected that the gold and copper mine will be operational. And that is what caused the miner's surge on Friday: An analyst says it now has the financial wherewithal to complete the project, and come 2014 it should "generate substantial profits."
Let me know in the comments section below and tell me whether there's a reason to dig deeper on Thompson Creek Metals and the Mount Milligan project justifies getting in at this discounted price.
The storied silver lining
Similarly, I'm waiting for my investment in Great Panther Silver to pay off. The miner has been fighting to reduce its cash costs for silver to less than $10 per ounce, and its second-quarter results showed that it got nearer the market with an 11% decline to $11.42 per ounce -- not quite there yet, but moving in the right direction. While silver production decreased, that was due to drought conditions at the mine, which have since abated, so it will now start processing the ore it was stockpiling. With gold production up 22%, the discount the market is offering seems attractive.
With the Fed holding off on any further QE measures for the moment, whatever else may come, silver miners got a nice bounce out of it (and gold did, too!), but Great Panther Silver did better than nearly all. Tell me below in the comments box if you agree that this silver miner's best days are yet to come.
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