Holiday enthusiasm continued to drive the stock market higher on Tuesday, and major benchmarks climbed toward record levels as investor sentiment remained upbeat. Several key investment banks issued their predictions for stocks in 2018, and the consensus appears to be favorable, with experts generally calling for a 10th straight year of gains. Prospects for tax reform and other business-friendly initiatives could provide even bigger boosts, but even when you look at the individual-company level, you'll find many attractive stories.
Rite Aid (RAD +0.00%), Marvell Technology (MRVL 1.80%), and Xunlei (XNET 5.68%) were among the best performers on the day. Below, we'll look more closely at these stocks to tell you why they did so well.
Could Rite Aid be a target?
Shares of Rite Aid gained 5% as speculation grew about a possible endgame for the drugstore retailer. Rite Aid has been struggling greatly since its proposed merger with Walgreens Boots Alliance was rejected, forcing it to accept a much smaller deal that still leaves it with the challenge of turning its remaining network of stores around. Yet in the eyes of one set of analysts today, buying Rite Aid could be the perfect way for e-commerce giants looking to break into the pharmacy market to create a major presence in the space quickly and effectively. With Rite Aid's market capitalization below $2 billion, it would be inexpensive for a major e-commerce player to pick up the retailer. Hard-hit shareholders are ready at this point for a lifeline from any quarter, but today's gains are tiny compared to what investors in Rite Aid have lost recently.
Image source: Rite Aid.
Marvell keeps climbing
Marvell Technology stock rose another 8%, adding to its advance on Monday following the company's announcement that it would acquire industry peer Cavium (CAVM +0.00%). Analysts looking at the potential impact of the deal seem to view it favorably, pointing to the opportunity for the two chipmakers to build synergies from their complementary business models. Jefferies upgraded Marvell from hold to buy, increasing its price target on the stock by nearly 50% to $27 per share. That's unusual for an acquirer involved in a cash-and-stock purchase, since the buying company's stock typically sags following a bid. The fact that Marvell gained ground both Monday and Tuesday speaks volumes about the way that investors see the growth prospects for the combined company.
Bitcoin sends Xunlei higher
Finally, shares of Xunlei finished higher by another 13%. The Chinese cloud computing company had been up more than 25% earlier in the day, adding to gains last week as excitement built about its strategic decision to shift its focus toward blockchain technology. The rise in the stock comes amid new record highs for the price of bitcoin, and investors must believe that Xunlei will be able to find some way to profit from the rise in interest in cryptocurrencies. Similar strategic moves toward the internet in the late 1990s were disastrous for many small companies, but shareholders in Xunlei hope the story will be different this time around.
