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.
CAPS Rating (out of 5)
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
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.
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
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.
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.
Fool contributor Rich Duprey owns shares of Cisco Systems and Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Apple and Cisco Systems. Motley Fool newsletter services have recommended buying shares of Apple and salesforce.com, creating a bear put spread position in salesforce.com, and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
More from The Motley Fool
Fusion-io Inc. Is Ahead Despite Increasing Competition
The flash storage arena is getting competitive, as EMC is targeting this segment for future growth. However, Fusion’s Atomic Series puts it in a strong competitive position.
Is Micron Technology Inc. Still a Buy?
Micron Technology reported another quarter of solid results in June. Even though the company has been on a tear over the last year, it still has room to grow and improve results down the line.
SanDisk Corporation Is Getting a Great Deal on Fusion-io
Fusion-io is finally getting acquired, just three years after going public. The conservative premium associated with the deal means that SanDisk will get a lot of bang for its buck.