Thursday’s Biggest Movers and How to Play Them

Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Thursday might have seen a loss in the overall market, but for five stocks it was a day of spectacular gains. Therefore, I am looking at these stocks, with the most impressive performance, and determining if any are a buy based on the catalysts that moved each higher.

<table> <tbody> <tr> <td> <p>Company</p> </td> <td> <p>Ticker</p> </td> <td> <p>Gain</p> </td> </tr> <tr> <td> <p>Boston Beer Co.</p> </td> <td> <p><span class="ticker" data-id="205361">(NYSE: <a href="">SAM</a>)</span></p> </td> <td> <p>15.50%</p> </td> </tr> <tr> <td> <p>Best Buy</p> </td> <td> <p><span class="ticker" data-id="202921">(NYSE: <a href="">BBY</a>)</span></p> </td> <td> <p>15.93%</p> </td> </tr> <tr> <td> <p>Zagg</p> </td> <td> <p><span class="ticker" data-id="223206">(NASDAQ: <a href="">ZAGG</a>)</span></p> </td> <td> <p>10.27%</p> </td> </tr> <tr> <td> <p>Research in Motion</p> </td> <td> <p><span class="ticker" data-id="205221">(NASDAQ: <a href="">BBRY</a>)</span></p> </td> <td> <p>4.13%</p> </td> </tr> </tbody> </table>
  • Boston Beer Co. might have posted the most impressive return after raising its full-year guidance and raising its expectations for amount of product sold by distributors and wholesalers. The bottom line guidance was far superior to expectations, therefore showing a company that is continuing to grow rapidly and is operating efficiently. As an investor, I love this rally. The reason is because it’s a fundamental rally. And although it’s priced at new highs, the stock is not expensive when you consider its growth. Therefore, I call SAM a properly valued stock of a great company.
  • Best Buy rallied following a report in the Star Tribune that Richard Schulze would make a $5 to $6 billion formal acquisition offer later this week. Therefore, after its gains on Thursday, the company is now valued at $4.77 billion. However, it might just be me, but this “rumor” sounds a bit overplayed. We have heard these rumors before, and yet nothing ever happens. Furthermore, I don’t like the timing. I don’t understand the reasons for Schulze wanting this news public if he’s serious about an offer. Nor do I understand why they would not wait until after the upcoming quarter, seeing as how all estimates predict yet more operational weakness. The stock seems a bit pricey to me, and the news is suspect at best. Therefore, I would not buy on the notion of this “offer” and would be very surprised if anything materializes from this report.
  • After a year of underperformance, Zagg rallied after announcing a $10 million buyback program over the next 12 months. There are a lot of investors who have lost faith in this company, and the reassurance that comes with a buyback program seems to have created a spark. With that being said, I do think the stock is fundamentally cheap, but as an investor I want to see how the company performs during this current quarter. Hopefully it is the start of something special, and proof that the company’s new management is ready to be shareholder friendly.
  • Research in Motion’s 4.13% gains were not market leading, however it’s the collective rally that is so impressive for this company. RIMM is now flaunting an 87% gain over the last three months, 65% being during the last month. There was no news to create the rally, therefore it was a continuation from the last several weeks. This excitement is in anticipation of the company’s Blackberry 10 operating system, and the belief that this operating system will produce results of old. However, I am not buying it. The company will announce earnings next week and there is a good chance that RIMM investors will get a reality shock. Because at this point, there is no reason to suggest a comeback in the making, at this point it is all speculation. And as a fundamental investor, I do not invest on speculation.

Regardless of how you assess each of these companies no one can deny the movement was special. Sometimes all it takes to spark a long-term bull rally is one good day, and it can cause the shorts to cover their shares and result in more significant gains. At this point it is hard to say if any of these stocks will continue to rally, but each is definitely worth monitoring. 

BrianNichols has no positions in the stocks mentioned above. The Motley Fool owns shares of Best Buy and Boston Beer. Motley Fool newsletter services recommend Boston Beer. Try any of our Foolish newsletter services free for 30 days. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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