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Why AOL, CEC Entertainment, and SolarCity Soared Today

By Dan Caplinger – Jan 16, 2014 at 8:01PM

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The stock market gave up ground on some troubling earnings news, but nothing in the market's pullback prevented a few high-flying stocks from posting big gains. AOL jumped 11%, while CEC Entertainment rose 13%, and SolarCity gained 12%. Find out more about what made these stocks soar.

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The stock market showed signs of internal discord today, with the technology industry helping to lift the Nasdaq Composite even as the broader S&P 500 gave up ground. Yet, even with stocks giving back some ground from gains earlier in the week, AOL (NYSE: AOL), CEC Entertainment (CEC.DL), and SolarCity (SCTY.DL) all rose substantially in today's session.

AOL jumped more than 11% after the company said it would sell off a controlling interest in its Patch local-news business. Technology private-equity firm Hale Global bought a majority stake in Patch, and although AOL didn't reveal details of the transaction, investors welcomed the shift in AOL's strategy with respect to the venture. Although the company had managed to grow its revenue from Patch substantially, it was nevertheless losing money, and AOL shareholders appear happier to move forward in other directions. An analyst upgrade of AOL shares also contributed to the positive mood.

Source: Wikimedia Commons.

CEC Entertainment rose 13%. The company famous for owning the Chuck E. Cheese animatronic pizza chain agreed to a takeover bid from Apollo Global Management (APO). In a sign that investors are hoping for a bidding war, CEC shares exceeded the $54 per-share offering price that Apollo set. But with CEC having sought ways to make the most of its slow-growth business, it's unclear whether any competing bids will emerge by the Jan. 29 deadline under the deal.

SolarCity gained 12% after analysts at Deutsche Bank started covering the solar stock, giving it a buy rating and setting a price target of $90 per share. The analyst pointed to SolarCity's success in getting capital markets to embrace its innovative asset-backed financing strategy, with possible plans to offer solar-linked debt directly to retail investors. As residential solar continues to get more popular, the opportunity for SolarCity to use its early-mover status to build up an impressive lead in the industry only gets bigger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends SolarCity. The Motley Fool owns shares of SolarCity. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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