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Did your stock just take off? 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.
The dustbin of history
Still showing signs of life is Research In Motion (Nasdaq: RIMM ) . After confirming that its new operating system will launch in the first quarter of 2013 and its subscriber base has expanded to 80 million, the stock rose almost 5% yesterday.
With all the hype surrounding the launch of Apple's iPhone 5 and the pre-eminence of Android devices like Samsung's Galaxy line, it's easy to forget the BlackBerry even existed, as its market share has dwindled.
But it's in emerging markets where RIM is making its mark, as lower-end (e.g., cheaper) phones are popular there. Analysts worry, though, that it may end up killing any hopes of margin expansion as the downward pressure on pricing impacts the new phones coming out featuring the BB10 OS. Still, the jump in subscriber count surprised many, as Wall Street had been expecting RIM to announce losses this quarter. Now with earnings due out tomorrow, the number everyone will be watching is the cash on the balance sheet to see whether it has the financial wherewithal to carry out its rebirth.
I'm skeptical RIM is experiencing little more than a last hurrah, and amid the crushing weight of iOS and Android, the BlackBerry will once again fade to black. But let me know in the comments box below why you think Research In Motion can actually mount a viable attack that will stick as opposed to being so done we should just stick a fork in it.
Tablet computers can no longer be classified solely as for adults, particularly since the advent of LeapFrog's (NYSE: LF ) successful children's LeapPad last year. It's back again this year and has already been deemed one of the hot toys of the season, which is why analysts were worried last month that the educational toymaker might not be prepared.
Shares of LeapFrog sold off in August after a heady earnings report that beat analyst expectations on the top and bottom line while also raising guidance for the full year. Not your typical dour news to lead to a sell-off, but with inventories down 16%, Wall Street was worried LeapFrog wouldn't have the stock in place to meet demand. New pressure was added after privately held Toys R Us announced it was entering the tablet market with its Tabeo that will be a more robust machine, coming as it does with web-surfing capabilities. However, the LeapFrog's lack of Web access might be a soothing feature for parents worried about their child's introduction to inappropriate content (the Tabeo does come with parental controls to minimize that).
That explains LeapFrog's 30% fall from grace in recent weeks, but with that discount, analysts are buying into its valuation. S..unTrust initiated coverage with a buy recommendation and a $14 price target, causing the toymaker's stock to rise 5%.
Is this all child's play? Let me know in the comments section below if you think LeapFrog will leap ahead.
Up, up, and away!
It was a bit of a backdoor endorsement of Cytori Therapeutics (Nasdaq: CYTX ) that got the stem cell researcher's stock moving 4% higher yesterday.
It has had a long-running collaboration with Japanese conglomerate Olympus. Yes, the company perhaps best known stateside as a camera maker is also involved in medical imaging and systems, among other fields. Yesterday, Reuters reported another Japanese conglomerate, Sony (NYSE: SNE ) , was taking a large 10% stake in Olympus to develop new medical equipment.
Olympus has faced accounting woes back home, and while several other companies had been rumored to be interested in climbing the mountain, analysts speculate the independence Olympus maintains with Sony (which only gets a board seat) is preferable. For Cytori, it means its most important joint venture partner is able to remain solvent and continue working on regenerative medicine systems.
I'm not sure the Sony-Olympus deal is enough of a catalyst to continue driving Cytori Therapeutics higher from here, but use the comments space below to tell whether it at least provides a floor underneath.
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