Whoa! These Stocks Rocketed Higher!

After some of its worst days of the year so far, the markets have rallied once again after the head of the New York Fed said this low interest-rate environment is here to stay. While the following stocks strapped on rocket packs 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 why their stock surged. 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? The markets fell 130 points, or 1%, yesterday, so stocks that went appreciably higher are pretty big deals. But let's see whether they're truly headed into orbit.

Chipping away at doubt
I wasn't the only one who grew disillusioned with MIPS Technologies as management's penchant for overpromising and underdelivering also caught the eye of one of its biggest shareholders, Starboard. That got them two seats on the board of directors and may have had a lot to do with yesterday's news that the chip company hired Goldman Sachs to explore strategic alternatives, including a possible sale of the company.

It just might be a good time to pursue that option. LTE and 4G technology is about to blow up even more. According to the folks at iSuppli, capital spending on 4G and LTE standards will nearly triple over the next year to more than $24 billion and reach $36 billion by 2015. And with M&A in the air again, MIPS' new LTE chips might prove attractive to someone.

With Advanced Micro Devices (NYSE: AMD) buying microserver maker SeaMicro, whose products can span any processor, MIPS' own processor architecture could help someone else achieve the success in mobile communications that has so far eluded it. Its technology is primarily used in chips for televisions, digital set-top boxes, and home-networking devices.

CAPS member amawesdude believes its wide range of offerings will be an attractive asset.

They have a wide product base ranging from tvs, to gps devices, to wireless routers, to tablets and beyond. They have a solid line up of new products being released over the course of the next year. Not to mention, their debt to cash ratio is ridiculous (In a good way). They are positioned for a few great years ahead.

Add MIPS to the Fool's free portfolio tracker to see whether someone buys in, and then give us your thoughts in the comments section below or on the MIPS Technologies CAPS page whether you think it could still make a go of it alone.

Remember this
Another memory-chip maker got a boost from talks about hooking up, but Fusion-io isn't trying to sell itself, just its products. Analysts at Piper Jaffray say it's negotiating with Cisco (Nasdaq: CSCO) to supply it with its memory cards, which, if it pans out, would be a big boost to its operations and catapult the network-equipment maker to a top-tier customer in less than a year. It would need to embed its cards in just 3% of Cisco's servers this year to achieve 10% customer status.

Facebook is already a major outlet for Fusion, and the analyst also expects revenues from it to double this year to $200 million. With a stellar pedigree in the management suite (Apple co-founder Steve Wozniak is its chief scientist, and Fusion's chips are in Apple's products, too), the memory maker looks ready to run further.

CAPS All-Star Fool4Life30 thinks the customer combination of Facebook and Apple alone is notable, and with salesforce.com coming on board earlier this year and possibly Cisco, I'm rating Fusion-io to outperform the markets as well.

Tell me if you agree on the Fusion-io CAPS page, and then add it to your Watchlist to see whether broadening its customer base will pay immediate dividends.

Going into orbit
These two companies may have divergent futures despite their short -term bounce, so check out for free the one stock The Motley Fool thinks will break all the rules to win. Hurry, though, because the free look at the new report, "Discover the Next Rule-Breaking Multibagger," is available for a limited time only.