Resist the urge to high-five everyone in the cubicles next to you. Your stock may have just strapped on a rocket pack and taken off for the moon, but 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.
Green Mountain Coffee Roasters
Human Genome Sciences
In yet another wild swing, the Dow dropped 228 points yesterday, or almost 2%, as investors expected the worst from a "day of rage" in the Middle East. It's a big turnaround, continuing to fit right in with a month known for madness, so stocks that went significantly higher are bigger deals still.
New frontiers in investing
Only days after inking an agreement with Peet's Coffee to have Peet's sell coffee pods for its Keurig machines, Green Mountain Coffee Roasters brewed up another major coup by signing on Starbucks
For Green Mountain, the deal places the coffee king as both the dominant market leader and the real innovator in the single-cup-brew industry. People aren't going to be talking about a Starbucks on every corner now, but rather Green Mountain in every cup. Or pod.
Are people mis-reading the headlines and thinking Starbucks bought GMCR? That's the kind of price jump usually reserved for buyouts or unexpected drug approvals. I can't stress enough that the financial details of this partnership are unknown and that will have a significant effect on the value of the deal to GMCR, which should have given investors pause.
nilesgold has a point, and further notes that while it will get royalties from selling pods under the Starbucks brand, Green Mountain makes most of its money selling its own coffee. The deal could undermine its best revenue stream. Let us know in the comments section below or on the Green Mountain Coffee Roasters CAPS page whether it is losing the coffee wars by winning the per-cup battle.
For the first time in 50 years, people with lupus will have the option of a new treatment. Human Genome Sciences and marketing partner GlaxoSmithKline
CAPS member TradingVideos says HGS can build on the Benlysta approval to help bolster its pipeline of drugs. Three-quarters of the CAPS community rating the biotech expect it to outperform the market; Wall Street was unanimous in its belief that it would beat the market, with all 20 analysts following it marking it to speed ahead.
Whether it can repeat its miraculous performance, you can keep tabs on Human Genome Sciences by adding it to the Fool's free portfolio tracker.
And a newer high
A 10% jump in stock price isn't how you'd normally expect the market to react to a company that saw profits fall 56% from the year-ago period. But when Spectrum Pharmaceuticals' $0.08-per-share earnings blew out analysts expectations of a $0.05-per-share loss, it was seen as a vindication of its drug Fusilev, which is used to treat chemotherapy side effects. Fusilev revenue came in at $23 million, up from just $100,000 a year ago, while sales of lymphoma drug Zevalin rose to $8 million from $5.1 million a year ago.
However, given stiff competition coming from Biogen Idec
Stay on top of future developments by adding Spectrum Pharmaceuticals to your free, personalized stock watchlist.
Going into orbit
That's why it pays to start your own research on these stocks on Motley Fool CAPS, where you can read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from the stock's CAPS page. Then you can decide for yourself whether your stock's headed for reentry or off to infinity and beyond.
Peet's Coffee & Tea is a Motley Fool Big Short short-sale pick. Green Mountain Coffee Roasters is a Motley Fool Rule Breakers recommendation. Starbucks is a Motley Fool Stock Advisor pick. GlaxoSmithKline is a Motley Fool Global Gains choice. Motley Fool Alpha has opened a short position on Green Mountain Coffee Roasters. Motley Fool Options has recommended buying long-term puts and writing a short-term bear put ladder on Green Mountain Coffee Roasters. The Fool owns shares of GlaxoSmithKline and Starbucks. 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.