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)


Oxford Industries (NYSE: OXM)



Westport Innovations (Nasdaq: WPRT)



Magic Software Enterprises (Nasdaq: MGIC)



Over the past two days the stock market has put together two back-to-back days of moving higher that pushed the index up 150 points, or more than 1.1%, despite lingering worries about Japan's nuclear meltdown and a still-muddled purpose in Libya. So stocks that went significantly higher are pretty bigger deals.

New frontiers in investing
Big floral-print Hawaiian shirts are apparently making a comeback as Tommy Bahama fashion wear owner Oxford Industries reported 2010 profits soared, 2011 looks just as good, and its dividend would get a bump higher too.

Tommy Bahama sales jumped 15% year over year and it was a prize-winning effort from Lilly Pulitzer as well, which the company bought back in December. Not all of Oxford's clothing lines produced such well-dressed results, but the future looks bright enough that the clothing maker will boost its dividend 18% to $0.13 per share.

Even with the jump in value, Oxford still looks like a bargain. J. Crew was bought out at an enterprise value-to-EBITDA valuation of 8.6 and peers like Polo Ralph Lauren (NYSE: RL) and Perry Ellis (Nasdaq: PERY) trade at 9.6 and 9.0, respectively. Oxford, on the other hand, goes for less than seven time EBITDA.

CAPS member pickemblind said back in December it would take Wall Street some time to understand the decision by the haberdasher to sell off its eponymous Oxford Apparel line and focus instead on Tommy Bahama and Lilly Pulitzer.

Oxford recently sold a portion of its business which was Oxford apparel and included its quarterly results in their last conference call. The part which seems to have confused investors is that they did not include this in their forward guidance, which made things look on the surface as a huge miss in next quarters results. It may take a while for the street to realize this but when they do the share price will recover and surpass the price it was before the sell off.

Let us know on the Oxford Industries CAPS page why this will not be a threadbare investment again any time soon.

Oil and gas fracas
Natural gas engine maker Westport Innovations had reason to cheer yesterday, as did investors in Clean Energy Fuels (Nasdaq: CLNE), which rose 9% after President Obama announced the federal government would purchase only alternative fuel vehicles by 2015.

The President also said oil and gas companies aren't producing enough from their existing leases, as if they'd pay all that money to get them and then sit on them. In response, The American Petroleum Institute charged the President "completely whitewashes" his administration's complicity in holding up the drilling process with foot dragging and refusal to issue permits.

Regardless of the President's or API's statements, highly rated CAPS All-Star alphadogg likes Westport's valuation, particularly if you're a long-term investor.

Really tough to value, I think right now ($21) its about fairly valued until there are some profits seen. That being said if you are in for the long haul (i.e. 10 years or so) this thing could be big, if it all works out and they keep their competitive advantage, 5 to 10 billion mkt. cap is not out of the question. Look for a sub 20 entry point in the $16 range.

You're permitted to drill down further on the Westport Innovations CAPS page, and then add the stock to your watchlist to see how it all plays out.

Orienting itself
There's been no specific news to account for Magic Software Enterprises' run up in value this week. We noted last week that the majority of Magic's revenues were derived from the financial services industry and another 20% came from telecom's, but really it's software could be used anywhere. To underscore that, it highlighted a deal with and SAP (NYSE: SAP) using its iBolt technology, and French e-purchasing company Oxalys Technologies just signed on for its uniPaas platform.

One thought on the run up was it had to do with investors getting confused about an analyst's positive comments on MGIC Investment, a mortgage insurer, with Magic's ticker symbol MGIC. Whatever the reason, highly rated CAPS All-Star IBDvalueinvestin finds the software specialist a steal at these prices: "The highest growth rate of any cloud computing stock under $10 that I could find in my search. You don't come across too many companies growing Revenues at 73% too often."

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. is a Motley Fool Rule Breakers pick. Westport Innovations is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Oxford Industries. 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.

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.