A hopeful September retail sales report lifted the markets higher yesterday by almost 1%, but don't get too excited: the non-seasonally adjusted numbers show a really big decline. Yesterday's euphoria may yet turn into tomorrow's melancholia. But some stocks were willing to celebrate anyway, surging well beyond the Dow's 95-point gain. Here are three that turned on the afterburners, rising by double-digit percentages.
|
Company |
Gain |
|---|---|
|
Clearwire (NASDAQ: CLWR) |
15.9% |
|
Yongye International (YONG +0.00%) |
17.1% |
|
James River Coal (NASDAQ: JRCC) |
23.2% |
Resist the urge to high-five everyone in the cubicles next to you, however. 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.
Clearly an opportunity
Wireless equipment specialist Clearwire continued to ride the wave of excitement following the announcement that Japan's largest wireless carrier Softbank would be buying a 70% stake in Sprint (S +0.00%) for $20 billion. The cash infusion will let the U.S. carrier build out its 4G network as it tries to claw back share from Verizon (VZ 1.61%) and AT&T (T 1.54%), but it also gives it a powerful weapon to buy up assets to do so.
One of those assets is Clearwire, which has gobs of valuable spectrum making it perhaps the real ultimate target of Softbank's strategy, since Sprint owns 48% of the equipment company. Because of the relationship between the two companies, the possibility of a rich premium for Clearwire keeps its stock moving higher. It was the reason I said Clearwire was the clear winner in this deal, but investors would do well to remember Softbank doesn't have to do anything to still reap the benefits of its technology. Yet with Clearwire preparing to deploy a TDD-LTE network next year -- the same 4G network technology that Softbank uses -- it may want full access to the spectrum to gird itself for the battle against its Japanese rivals in landing Apple's (AAPL 0.85%) iPhone.
Let me know in the comments box below what you think is an appropriate price tag for Clearwire's assets.
Sailing off into the sunset
Chinese fertilizer maker Yongye International also surged higher on the prospect of a potential deal yesterday, but this one is from the company's CEO and board of directors, who proposed taking the company private for $6.60 a share.
Chinese companies have been fleeing the U.S. markets. The Chinese government is encouraging the flight, with the state bank providing up to $1 billion to make the move. As a number of small Chinese shops turned out to be frauds, aspersions were cast over the broader universe of stocks.
Yongye was the subject of a series of disparaging reports last year made by short-sellers who effectively took the stock down. It got a bit of a reprieve when Morgan Stanley (MS 0.31%) invested $50 million in it, though I was skeptical it would amount to much, as I wasn't sure it's fulvic-acid-based fertilizer offered real value. It seems this go-private deal won't give investors the value they deserve, either.
Coal turns black
What was previously coal's bane may now prove to be its savior. Natural gas prices have been at historically low levels, and though still depressed, they moved above $3.60 per million British thermal units as the Energy Information Administration suggested there would be lower-than-expected injections into storage. That could lead to higher prices this winter, and they might even be north of $4 per million Btus next year.
That would no longer make gas the preferred choice for power plants, which might return to coal once again. And the possibility of foreign demand for coal heating up also pushed James River Coal and Alpha Natural Resources (NYSE: ANR) higher.
While hopeful, there's a lot of room for a number of scenarios to play out, not all of them good. I'd say coal investors, particularly those weighing in on James River, should enjoy it while it lasts. Shares are up 130% over the last three months and have nearly tripled from their lows. As I've noted before, while I like Alpha's prospects, I'm not so sure about the debt-laden James River, but you can tell me in the comments box below whether this turnabout is for real.
