The Motley Fool Previous Page


Whoa! These 3 Stocks Just Trounced the Dow

http://www.fool.com/investing/general/2012/12/09/whoa-these-3-stocks-just-trounced-the-dow.aspx

Rich Duprey
December 9, 2012

Better-than-expected jobs data sent the Dow Jones Industrial Average (INDEX: ^DJI) 81 points higher on Friday and capped a week that saw it nestle firmly about the 13,000 mark. But with the falling unemployment rate based on some particularly ugly truths -- such as the only reason it fell was because the labor participation rate dropped to 63.6% -- expect the euphoria realized last week to be short-lived.

But some companies were able to record performances that outdid the indexes, with some even rising by double-digit percentages. Yet 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

Groupon (NASDAQ: GRPN)

23%

Trina Solar (NYSE: TSL)

9.9%

GT Advanced Technologies (NASDAQ: GTAT)

8.6%

Opportunity lost
All anyone can really say is that Google (NASDAQ: GOOG) dodged a bullet when it passed on buying Groupon, and though rumor was that it was once again considering an acquisition, it's nothing short of grasping at straws to think it will pull the trigger.

It was nothing short of hubris that led Groupon to spurn the $6 billion buyout bid, but at the time it was a media darling, because social-media companies were all the rage. Yahoo! (NASDAQ: YHOO), as well, was said to be interested, so if Google wanted to buy the grand dame of the online-daily-deals ball, it was going to need to throw in a hefty, seven-figure breakup fee, in case antitrust regulators squashed the attempt.

Groupon burnished its reputation by raising nearly $1 billion in a round of venture capital financing and then going public at $20 a share, which valued the company at $13 billion. While it would go on to hit even higher valuations in the months following the IPO, the positioning for its downfall was already written.

Copycats were flooding the market, and it had an indefensible, competitive moat. LivingSocial, ReachLocal (NASDAQ: RLOC), Local.com (NASDAQ: LOCM), even Google itself began to offer daily deals. There was also a lot of anecdotal information out there that businesses signing up for a Groupon deal will either not make the money promised or will be swamped by customers only wanting that single discount. Stickiness wasn't exactly a Groupon hallmark that drove customers to a company.<