Why Dresser-Rand Group Inc. Stock Jumped Today

Is this meaningful or just another movement?

Jul 17, 2014 at 3:46PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of energy equipment maker Dresser-Rand Group (NYSE:DRLC) jumped as much as 19% early in trading after rumors swirled the company would be bought out.

So what: Germany's Manager Magazin reported that Siemens AG (NASDAQOTH:SIEGY) has been preparing a takeover bid for months in an effort to gain more exposure to natural gas drilling. After missing out on Alstom SA, the company may be looking to keep up with rivals in the space as energy companies consolidate around the world. 

Now what: A buyout isn't out of the question, but buying after today's pop is risky. Analysts don't think Dresser-Rand is a motivated seller and, if a deal doesn't go through, the stock could lose all the value it gained today. I wouldn't change my investment thesis today, but taking some profits is probably wise for shareholders. In case a deal doesn't go through, you can lock in some profits.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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