Why Trex Company Inc. Stock Popped Today

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 wood and plastic composite maker Trex  (NYSE: TREX  ) jumped as much as 12% today on an analyst upgrade.

So what: Stifel Nicolaus upgraded the stock from hold to buy and put a price target of $37 on shares. That price target implies a 37% premium from yesterday's closing price in the next year.  

Now what: Investors need to keep in mind that analyst upgrades can often cause a short-term pop, but they do nothing to change the fundamental value of a company. That can be seen even today, as shares have slid back to about a 6% gain. This isn't a reason to change one's investment thesis, but it is good to be aware that the pop was caused by an analyst's action and will more than likely fade over the next few weeks.

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