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Why Harmonic, Seadrill, and Tile Shop Holdings Jumped Today

By Dan Caplinger – Sep 28, 2016 at 5:31PM

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On a solid day for the market, these stocks rose. Find out why.

Wednesday brought better times to the stock market, and major market benchmarks finished the day up around half a percent. Helping to move the S&P 500 and Dow higher was news from oil cartel OPEC that member nations had reached an accord to try to retake control of the energy market, and that led to extensive optimism among investors in oil producers as well as the physical commodity. The United States Oil Fund (USO 2.89%) jumped almost 5%, outpacing the SPDR S&P 500's (SPY -2.79%) 0.5% gain. Yet some individual stocks also posted healthy increases, including Harmonic (HLIT -3.42%), Seadrill (SDRL), and Tile Shop Holdings (TTSH -2.74%).

Image source: Seadrill.

Harmonic makes a sweet-sounding deal

Harmonic soared 25% after the company announced a warrant agreement with Comcast (CMCSA -2.60%) Tuesday night. The agreement calls for Comcast to purchase as many as 7.82 million shares for $4.76 per share, subject to certain vesting requirements that are tied to specific milestone events. In the grand scheme of things, a $37 million investment might not seem like a big deal, but Harmonic's market cap of roughly $450 million makes even a modest agreement significant. What investors hope is that the deal will encourage Comcast to do more business with Harmonic, which has CableOS software that would benefit from a high-profile customer ramping up sales.

Seadrill hopes for better times ahead

Seadrill jumped 20% in the wake of the news from OPEC suggesting that tighter limitations on production might finally be coming. Seadrill has been particularly vulnerable to oil price weakness over the past couple of years, in large part because the deep-water projects that it emphasizes require higher oil prices to make them economically attractive. Investors still have concerns about Seadrill's available liquidity, and even though it has stopped paying a dividend, low prices could force it to renegotiate new contracts at lower prices. Until oil makes a more definitive move higher, it will be hard for Seadrill to mount a more impressive recovery.

Tile Shop Holdings gets a nice invitation

Finally, Tile Shop Holdings gained 10%. The maker of stone, ceramic, porcelain, glass, and metal tiles will become a member of the S&P SmallCap 600 effective Friday after the market close. The spot that Tile Shop Holdings is taking opened up as a result of a private equity buyout of the previous position holder, and shares gained as investors tried to get into the stock before index funds are required to do so later in the week. For Tile Shop, the milestone is a vote of confidence in the company's future, and investors hope that further share-price gains will come in due course.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Tile Shop Holdings. The Motley Fool recommends Seadrill. 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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Stocks Mentioned

Tile Shop Holdings Stock Quote
Tile Shop Holdings
$3.90 (-2.74%) $0.11
SPDR S&P 500 ETF Trust Stock Quote
SPDR S&P 500 ETF Trust
$362.79 (-2.79%) $-10.41
Comcast Stock Quote
$29.27 (-2.60%) $0.78
SeaDrill Limited Stock Quote
SeaDrill Limited
United States Oil Fund Stock Quote
United States Oil Fund
$75.10 (2.89%) $2.11
Harmonic Stock Quote
$13.28 (-3.42%) $0.47

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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