Whoa! What Just Happened to My Stock?

The euphoria over the EU bailout of Greece was short-lived, but just because your stock strapped on a rocket pack and went even higher, resist the urge to high-five everyone in the cubicles next to you. 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.

With the markets falling 276 points yesterday, or 2.3%, stocks that went appreciably higher are pretty big deals.

Shining a light on growth
Investors in Indian Internet portal Sify Technologies lost their minds yesterday after the IT specialist reported stronger-than-expected earnings. It's not that the improved situation didn't merit investor support, it's just that the heights to which they sent the stock don't seem merited. The stock may have been oversold beforehand, but it's looking overbought at this level.

Its commercial and consumer segment, home to its broadband access and cyber cafe business, continues to wither, with revenues down 30% from last year and off 5% from the previous quarter. Along with fellow Indian Internet portal Rediff.com (Nasdaq: REDF), Sify has been counting on a burgeoning population and a government intent on spending a lot of money to increase broadband access. That's not materializing.

Fortunately, that segment is the smallest unit for Sify. Its enterprise segment is the largest and it experienced 7.5% growth from the year-ago period as its international long-distance business continued to grow, reaching 704 minutes in the quarter, but revenues slid 23% from the second quarter.

Highly rated CAPS All-Star member TSIF timed his entry into Sify well, but even he admits there is less to the story than he would prefer, and that it is too often subject to speculator whims: "I certainly agree that Rediff and Sify might grow over time, but quarter after quarter of consecutive losses demonstrate that growth is a slow process, requireing a great deal of spending."

Add the Indian IT specialist to your watchlist and let us know on the Sify Technologies CAPS page whether you think it's set to fall back to earth.

No generic opportunity
Despite the FDA approving a generic version of blood thinner Lovenox from Amphastar Pharmaceuticals last month, a court ruled the generics can't be sold because they infringe on patents held by Momenta Pharmaceuticals. With such court proceedings usually taking years to resolve, Momenta will be able to protect its 50% market share, as Watson Pharmaceuticals (NYSE: WPI) won't be able to sell its generic either until the court case is decided.

In partnership with Novartis (NYSE: NVS), Momenta markets the only approved generic of Lovenox, for which it earns 45% of the profits and which represents most of Momenta's revenue. That sinecure is now secure for a while longer.

A few days ago, CAPS member Clint35 decided Momenta not only had strong management backing, but strong fundamentals too.

Small and cheap. Very good margins. Good sales and earnings growth. Insiders own 15%. Good balance sheet.

Tell us in the comments section below or on the Momenta Pharmaceuticals CAPS page whether you think the ruling will stand and whether the company can get its other irons out of the fire fast enough in the event it is overturned. Add Momenta to your watchlist to see how it plays out.

Strolling down the Avenue
To think big microwave backhaul provider DragonWave has decided to go small. Real small. Its Avenue microcellular solution will let carriers deploy six-inch and smaller antenna systems to provide street-level microcellular backhaul offerings. Bundled with FiberTower's spectrum, which extends over 99% of the U.S., DragonWave's Avenue will target areas where there is high data-capacity demand or limited availability of fiber or other wireline options while meeting strict zoning requirements.

Last week I noted I wasn't excited about DragonWave's prospects because of the troubles its largest customer, Clearwire (Nasdaq: CLWR), faces as well as the extended nature of its loss-making operations, which would continue for several years yet by management's own estimation. But jopow suggested the FiberTower deal made DragonWave's turnaround story far more compelling.

But this new product line will be promoted to everywhere in the world where there are overloaded mobile networks in densely heavy traffic areas. This new product is top of class and has very desirable specifications and reasonable price ranges to the customers. This new line will be additional revenue beyond what has been projected and guided. Therefore, the turn around story is actually more compelling.

Add DragonWave to the Fool's free portfolio tracker if you'd like to rent a front-row seat to its future opportunities.