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.


CAPS Rating (out of 5)

Yesterday's Change

Universal Display (Nasdaq: PANL)



Cell Therapeutics (Nasdaq: CTIC)



Orient Paper (NYSE: ONP)



With the markets tumbling down 242 points, or 2%, yesterday, they are now in the red for the year. The prior day's bullish recovery turned into a rout as Japan's nuclear catastrophe looks out of control. Stocks that went significantly higher then are bigger deals still.

New frontiers in investing
Good things do come in small packages. The proliferation of smartphones is generating huge demand for OLED screens, and Universal Display is the leading provider of the technology. While only the day before investors had been worried the Japan situation would cripple its capabilities, at least temporarily, management said that as tragic as the events unfolding were it wouldn't have any sort of meaningful impact.

In fact, because its biggest customers like Samsung and LG Display (NYSE: LPL) were chewing up its screens as fast as it could make them, cash flows turned positive and management is seeing 2011 as a breakthrough year. Even tiny eMagin (Nasdaq: EMAN), which targets small screen displays for the military, moved higher yesterday by almost 5%.

Taking a decidedly contrarian position was CAPS All-Star member TMFCandyMountain, who believes there is more sizzle than steak on display here:

Just bizarre. Trading at 60x sales with no substance behind this. It's all story. It would be helpful if they disclosed anything about the licensing terms.

Another All-Star MegaEurope chimed in that with some of its important patents due to expire soon, it may have new challenges facing it other than profitability:

A lot of the patents are also expiring over the next few years. To support this price, they better get wildly profitable very quickly.

CAPS, though, is more than just what some top investors think. Let us know on the Universal Display CAPS page whether the picture's getting any clearer for this "overnight" tech success story.

Making smoking "healthy"
It was almost a month ago investors were selling off shares of Cell Therapeutics after the biotech announced a big dilution plan. The company needs the cash because it has no revenues and the FDA refused to approve its cancer drug Pixuvir unless further tests are conducted. While the biotech is appealing the decision, it's also going to be running the new trials beginning this quarter, and the money will come in handy.

That's why CTI's announcement that it had struck a deal with Chroma Therapeutics to develop and license its cancer therapy tosedostat enthused investors yesterday. While CTI has to make a $5 million upfront payment and another $5 million when the pivotal trial is initiated, the drug is already in the advanced stages of testing and could result in a strong revenue stream if approved. Tosedostate is similar to bortezomib -- which is marketed as Velcade by Millenium Pharmaceuticals -- and lenalidomide, which is Celgene's (Nasdaq: CELG) Revlimid, in that it's a more tumor selective targeted therapy.

Despite the tough times it's gone through, almost 90% of the CAPS members rating CTI think it will outperform the broad market averages. Follow along on its development by adding it to your watchlist. Alternatively, add any of the stocks mentioned in this article to your watchlist by clicking the "plus sign" next to each company's ticker.

Orienting itself
Chinese small cap Orient Paper bucked the rising tide of fraud allegations sinking other Chinese reverse merger stocks, even as several new claims were added to an already long laundry list. China MediaExpress had its auditor flee after looking at the books, saying management couldn't be relied upon. China Agritech (Nasdaq: CAGC) dismissed Ernst & Young as its auditor this week after management questioned its independence. Somehow, it's not the auditor I'm worried about here.

While Orient Paper was originally rocked by fraud charges, too, it's been able to overcome them because no smoking gun has been found. It's all just allegation and supposition that things didn't look right. Apparently, investors felt that since it has remained standing when other miscreants have fallen, it would go on to prove the short-sellers wrong.

But CAPS investor AStarSearch asks what has changed at Orient Paper really to warrant such a run-up? Since he doesn't see anything substantial, he thinks it will return from whence it came.

Whether this Chinese small cap weathers the storm, you can keep an eye on which way the wind is blowing by adding Orient Paper to the Fool's free portfolio tracker.

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 re-entry, or off to infinity and beyond.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy. Universal Display is a Motley Fool Rule Breakers selection. 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.