Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Share prices popped 10% at Internet domain-name registrar VeriSign
So what: Kinda strange, huh? So here's the skinny: Barring some sudden onset of illness, the theory du jour is that Robins is keeping mum because some major corporate announcement is in the offing. Forbes thinks it's a takeover. Bloomberg proffers the theory that the company is getting all hands on board to announce a new CEO. Whatever it is, the news sounds big.
Now what: Not big enough to justify buying shares in the company without knowing what's up, however. Oh, I realize the price looks tempting -- 7 P/E, 16% growth rate … a no-brainer, right? But think before you act: VeriSign sells this cheap for a reason, and one of the reasons is that the company's supposed earnings (the "E" in P/E) aren't all they're cracked up to be. Despite reporting profit of $775 million last year, VeriSign actually generated only $900 thousand in free cash flow during the period.
Long story short: VeriSign's news may well turn out to be good -- but its stock price isn't.
What does VeriSign have to say for itself? Add the stock to your Watchlist and find out.