The Dow Jones Industrial Average rose 66 points Friday, closing out a week that saw the index move 1.4% higher. Strong earnings continued to undergird a sense of improvement, despite ominous signs out of Europe. While the stocks below 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.
Enough to raise your blood pressure
The bounce in Chelsea Therapeutics
The letter sent to Chelsea says the agency wants to see how the therapy works over two to three months. It's already got a trial underway for 10 weeks, and though that might not be enough for the FDA, it's a hopeful spot to be in. Along with a black-box warning, I'd say these aren't insurmountable problems and it's a common enough refrain from the agency.
While Northera was the nearest-term catalyst for Chelsea, the biotech has other developments in its pipeline that interest investors, like CAPS All-Star zzlangerhans, who's something of a sector guru for the investor community:
The real reason for the green thumb is the possibility of a rebound ahead of topline phase II data for antifolate CH-4051 in rheumatoid arthritis, which is expected in June. CH-4051 intended to have similar efficacy to methotrexate in inflammatory conditions with lower toxicity. The potential market for CH-4051 is enormous and interim data from the phase II trial late last year seemed very solid. I've always seen CH-4051 rather than Northera as Chelsea's most viable pathway to profitability.
A wide gulf between them
Drilling activity in the Gulf of Mexico is picking up again after a two-year lull following the Macondo well blowout and the ensuing moratorium. While most of the drilling seems to be in the deepwater regions where Big Oil companies like Chevron and BP
It's not a wildly dramatic pickup, as utilization rates in the Gulf are still below 50% for its rigs, but revenue per day for its lift boats rose 5% to $8,225 in the latest period, while operating days jumped 12%. Even though its total average dayrate fell to $14,700 due to international segment weakness, the prospects for growing Gulf activity gave investors hope the strongman's stock will recover to its post-disaster highs.
Over on CAPS, more than 1,650 members have weighed in on the offshore driller, and 96% of them believe it will come back to beat the Street. Let us know on the Hercules Offshore CAPS page if you agree this is a hopeful sign, or tell us in the comments section below if international markets will take away any benefit the Gulf is giving. Add the driller to your watchlist to be notified if a tidal wave of work comes its way.
Going into orbit
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Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Exelixis. Motley Fool newsletter services have recommended buying shares of Chevron and Exelixis. The Motley Fool has a disclosure policy.