Did These 3 Stocks Deserve Their Gains?

The Dow Jones Industrial Average closed out its winning streak at 10 days, closing down 25 points on Friday. But it's still up a remarkable 11% in 2013 already and was ready for a breather.

The following three stocks, however, continued to party on, though you should 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.

Company

% Gain

Gluu Mobile (NASDAQ: GLUU  )

14.8%

Mechel (NYSE: MTL  )

10.1%

Quantum   (NYSE: QTM  )

8.3%

Going all-in
There was no company-specific news to send shares of mobile gaming-cum-gambling entrepreneur Glu Mobile higher on Friday, but the launch of its first real-money gambling product the other day is probably helping to keep the momentum going.

It also didn't hurt that NPD Group released data showing that sales of video-game hardware, software, and accessories slid 27% last month, but much of that was being made up in sales of digital games and apps, putting Glu at the forefront of where the gaming action is: online and with real money.

That strategy hasn't paid off for Zynga (NASDAQ: ZNGA  ) , though, despite following a similar path. It secured a license to run online gambling in Nevada, but perhaps because Glu is already on the market with a product in conjunction with its tie-in with Probability, Zynga's shares fell more than 2% on Friday. Still its shares are up 75% from the lows they hit back in November, and Glu's shares are 67% higher.

As doubtful as I've been about this transition to online gambling, investors don't seem to think it's a simple roll of the dice when it comes to these two players.

Canary in a coal mine
Russia's largest steelmaking coal producer, Mechel, is still riding higher from reports that Glencore International is interested in purchasing its Kazakhstan ferroalloy assets, which analysts estimate could be worth some $250 million to $300 million.

Mechel is intent on selling off assets in an effort to pay down more than $9 billion in debt, as declining coal prices have crushed profits and it would prefer to sell the entire division, worth approximately $550 million, rather than break it up piecemeal. There are other interested parties for the business, which could help boost the final selling price, as Eurasian Natural Resources was mentioned as one potential bidder, according to a Bloomberg report.

The coal producer's shares have lost about half their value from their 52-week highs hit almost exactly one year ago.

No justice, no peace
Looks like hedge funds are increasingly interested in data-storage specialist Quantum, which saw Starboard Value increase its holdings from 15.9% to 16.7%, including the convertible debt it holds,  according to documents filed with the SEC on Friday.

When Starboard first made its presence known back in November, it noted that Quantum's shares were undervalued and said it wanted to "engage in discussions" with management on how best to unlock shareholder value, presumably by selling off underperforming assets, though Starboard didn't discuss any specifics. A seat on the board of directors was a possibility, however.

Seems Starboard is intent on showing it's still serious about its purpose, particularly since this stock, too, continues to trade at about half the level it did at its high point.

Whoa, Nelly!
Zynga's post-IPO performance has been dreadful, and investors are beginning to wonder if it's "game over" for this newly public company. Being so closely tied to the world's largest social network can be a blessing and a curse. You can learn everything you need to know about Zynga and whether it's a buy or a sell in our new premium research report. Don't even think about picking up shares before you read what our top analysts have to say about Zynga. Click here to access your copy.

 


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