You saw the headlines. You know your stock's price made a big move. But what does that portend for your investment's future?
By pairing the latest news with the collective wisdom of our 170,000-strong Motley Fool CAPS investing community, we might be able to discover whether your stock's latest exploits are a short-term hiccup -- or the start of a much bigger trend.
The following stocks have all made big moves over the past five days:
Change Past Week
Source: finviz.com, Motley Fool CAPS.
There comes a point when you have to realize that however sound your judgment was in selecting a stock, sometimes whether you profit or lose comes down to luck. It's equally important that you realize when you're in the middle of a mania and it's time to get out, even if you're leaving a bit of money on the table.
Last December I headed over to CAPS and selected Indian portal service Rediff.com as a stock to beat the market, even though it hasn't been profitable in years, because the government there was promising to infuse billions of dollars to spread Internet access.
Like Baidu in China, an economy experiencing burgeoning growth with a rising middle class heralds heightened demand for services such as those Rediff and Sify Technologies provide. They both provide the means for accessing the Internet and benefiting from it, and both companies have more than tripled since just the beginning of the year. In fact, Rediff is up 460% over the past 12 months while Sify has risen 380%.
That kind of performance gives me pause. I was expecting the tech leader to benefit from the investments, just not all at once and not in just four months time. The Indian government has committed to increasing broadband access from 10 million connections in 2010 to 75 million in 2012 and 160 million by 2014.
But being an Indian and seen how things work here, I can say that promise of increasing 700% Internet infrastructure by 2012, is a complete mirage. When Indian government promises such things, every Indian person adds 3 years to it just to get 50-60% of what is promised.
That sounds like government at work everywhere. So although Rediff and Sify are bound to benefit from whatever money the Indian government pours into the space, these stocks have decided to realize them upfront all at once.
Moreover, the latest surge in Rediff's stock was a result of its announcing a local Groupon-like deal service. Everyone is elbowing their way into the space: Facebook, OpenTable, and TheKnot. Previously Travelzoo's LocalDeals unit helped propel earnings, and local search players ReachLocal and Local.com are shining because of all the attention being lavished on the space.
Maybe there are that many deals to go around to support everyone that wants to provide the service, but this looks to me like just the latest craze, and that means a lot of the stocks that are soaring right now will shortly come back to earth. So I'm go to be closing out my green thumb on Rediff on CAPS today, but you can head over to the Rediff.com CAPS page and let us know if you think the Indian portal has been swept up by the mania or if there's real support for the surge it's enjoying.
If Sify Technologies at 800 times negligible earnings and almost three times book value is too pricey for you, keep tabs on it by adding it to the Fool's free portfolio tracker.
Glad tidings and well met
Oncology and endocrine therapy specialist AEterna Zentaris has had the good fortune of reporting some positive data about drugs under development, and the market is finally realizing its potential.
Earlier this month, the biotech reported favorable results on its anticancer compound AEZS-131, which was followed by a positive abstract getting published on its colorectal cancer drug perifosine. AEterna licenses perifosine to Keryx Biopharmaceuticals
The steady stream of good news following AEterna is causing the CAPS community to take notice, with more than 97% of the 238 members rating the biotech believing as Eulogistics does that it will beat the broad market averages:
News about this company is overwhelmingly positive. The potential upside outweighs the downside and also seems more likely, but is of course contingent on their drugs being approved and their deals with Japan going through.
Add AEterna Zentaris to your watchlist to see whether it can live up to the hype.
Baidu, OpenTable, and ReachLocal are Motley Fool Rule Breakers recommendations. 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.