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Whoa! My Stock Crushed the Market!

Rich Duprey
November 2, 2011

With Greece threatening world stability by taking its bailout package to a referendum, markets were in a rout globally. But just because your stock strapped on a rocket pack and went even higher, resist the urge to high-five everyone in the cubicles next to you. Smart investors won't celebrate until they know that upward leap was justified. Without a fundamental basis for the bounce, these stocks can quickly make the return trip down.

Is now the time to lock in profits, or is this just the first step toward even higher valuations down the road? Let's examine several stocks that just hit the afterburners, and see whether they're truly headed into orbit.


CAPS Rating (out of 5)

Tuesday's Change

Corinthian Colleges (Nasdaq: COCO  ) ** 14.1%
Neurocrine Biosciences (Nasdaq: NBIX  ) ** 16.3%
Jaguar Mining (NYSE: JAG  ) *** 11.5%

Source: Motley Fool CAPS.

With the markets falling 297 points yesterday -- or 2.5% -- stocks that went appreciably higher are pretty big deals.

Shining a light on growth
At first glance it might be hard to see why the market was so euphoric about the earnings results posted by Corinthian Colleges. There was a 23% drop in enrollment causing the for-profit educator to post revenues that were 17% lower than last year. The lower revenues in turn generated adjusted losses of $0.04 per share in the quarter, worse than the $0.02-per-share loss analysts anticipated and a big changed of fortune compared to a $0.38-per-share profit it posted a year ago.

It's obvious the misguided witch hunt the Obama administration has been on against the industry is taking its toll. DeVry (NYSE: DV  ) reported worse-than-expected losses last week, Career Education saw its margins cut in half, and Apollo Group (Nasdaq: APOL  ) saw its new student starts slashed by a third.

Yet looking ahead, Corinthian is hoping to breakeven next quarter with profits of as much as $0.35 a share for the full year coming in. That will be helped along by enrollments turning north again in late 2012.

I'll admit I'm not as hopeful as some. The persecution of profit-making businesses will be tough to counteract as the regulatory burden weighs down operations. The investment community might disagree, as 84% of the CAPS members rating Corinthian think it will outperform the broad indexes. Yet the two-star rating they've assigned it suggests they do think there are better places for your money.

Add the for-profit educator to your watchlist and let us know in the comments section below or on the Corinthian Colleges CAPS page if making money while helping others learn is an evil concept to you, too.

No generic opportunity
Hitting new milestones for its gynecological drug candidate elagolix and Type 2 diabetes treatment GPR119 allowed Neurocrine Biosciences to book revenues that nearly tripled as partners Abbott Labs (NYSE: ABT  ) and Boehringer Ingelheim paid milestone payments to the biotech. In particular, Neurocrine received $10 million for moving elagolix into phase 2 clinical trials in uterine fibroids and another $20 million for a pre-phase 3 meeting with