Whoa! These Stocks Defied the Shaky Economy

The Fed gave off mixed signals about dumping even more money into the economy as unemployment claims rose just as new home sales flatlined, which didn't lend itself to a very bright economic picture. And the market turned tail, falling 115 points, or almost 1%. Still, some stocks didn't feel the need to be so dour and rose by double-digit percentages.

But 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, because without a fundamental basis for the bounce, these stocks could just as quickly make the return trip down.

It was an upgrade by analysts at DA Davidson that caused business-class 4G Internet service provider Towerstream to jump yesterday, and it was the upgraded prospects through partnerships that led Nokia and broadband equipment provider Calix higher. In short, the mobile sector continued to outperform the economy.

Towering opportunity
Using small-cell technology to bring broadband service to businesses, Towerstream says the technology offers the ability to deliver the kinds of capacity needed and exceeds even that offered by LTE technology. The market opportunity is fairly large.

According to Cisco, mobile-data traffic will increase 18-fold by 2016. Growth doubled for the fourth year in a row last year as smartphone usage tripled, and it will be responsible for an even larger percentage of data usage as time passes. Smartphones represent 82% of total handset traffic, even though basic handsets still account for 88% of the devices on the market. I've already bet that Alcatel-Lucent (NYSE: ALU) will lead the way in small-cell technology as the means for satisfying the demand for ever-greater amounts of traffic, but Towerstream saw bandwidth upgrades by customers hit record levels in the second quarter, suggesting there's room for more than one winner.

A smart solution
Cell phone maker Nokia has essentially put it all on the line with its bet on a Windows 8 handset that should be hitting the market next month. Giving it a boost yesterday, though, was word it had signed on Verizon to sell its new Lumia phone, giving it three of the four top wireless carriers. Sprint is the only major carrier not yet carrying the phone.

If it's going to challenge the hegemony of Apple and Google (Nasdaq: GOOG), it's going to need the muscle Verizon brings to the market. And the wireless carrier needs Nokia, too. Being so dependent on the iPhone and Android-based handsets is a risky proposition, so bringing a third platform in helps diversify its base a bit.

Still, I'm not particularly hopeful Nokia's going to succeed. As good as the start has been with its Lumia line -- one analyst says it's ahead of where both Apple and Samsung were when they launched the first versions of the iOS and Android phones -- Apple shipped 26 million iPhones in the second quarter and Samsung shipped 50 million smartphones. Nokia shipped 10 million.

But it's a start, and with Verizon marketing the phone, we'll likely see those numbers rise. With more than 3,200 Motley Fool CAPS members weighing in on the handset market, 89% see Nokia beating the broad averages. Tell me in the comments section below if I've misread its ability to take on Apple and Google.

Pulling the rug out
The deal broadband equipment maker Calix signed yesterday was to buy the fiber access assets of Ericsson, which would also become a reseller of Calix's equipment in international markets. That immediately upped its profile and potential, and puts it at an advantage to rival Adtran, which saw its stock plummet 7% on the news.

Adtran had an agreement of its own in place with Ericsson, so analysts believe the new one with Calix will cut the legs out from underneath it. The broadband equipment maker had also bought the broadband business of Nokia's joint venture with Siemens earlier this year, but as Europe's financial woes grow, there's been less investment being made by phone companies and the value of those assets is withering away.

Among the analysts CAPS tracks, all five unanimously agree that Calix should beat the indexes, but you can tell us in the comments section below if it's equipped to handle the international scene.

Whoa, Nelly!
The mobile computing and communications market is where the action's at and it shows no sign of relenting. A brand new premium report on Apple lays out why it remains the one to beat -- and the three risks you absolutely must keep an eye on. Sign up now and get free updates!