Four Outlooks for Thursday’s Biggest Movers
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
There was nothing major that happened on Thursday; the market was volatile as we react to every word regarding the fiscal cliff, but very few stocks traded with excessive gains/losses. Those that did trade with large gains/losses had major developments, and in this piece I am looking at those headlines to determine their relevance.
- A report of strong Ugg boot demand pushed shares of Deckers higher on Thursday. However, Deckers is a stock that has priced in the absolute worst case scenario. Its stock has lost nearly 50% of its value in 2012 yet maintains nearly 45% of its float held short. Therefore, its gains on Thursday were most likely due to a multitude of factors, including the report showing strong Ugg boot demand and shorts taking profits off the table. However, this remains to be a company with many questions, and as an investor, I would be cautious when buying.
- BPZ Resources rallied nearly 9% on Thursday, adding to its multi-week gains, after closing its contractual agreement for the sale of a 49% participating interest in Block Z-1 offshore Peru to Pacific Rubiales Energy. The company has seen its fair share of difficulties over the last year, with falling sales and margins. However, this sale was very important to the future structure of this company. I’m not suggesting that Thursday’s news makes BPZ a “buy,” but rather that it was worth the performance.
- After falling more than 55% off its all-time highs, shares of Questcor Pharmaceuticals have finally began to recover over the last couple months. However, on Thursday another big blow was delivered to the company: Blue Cross/Blue Shield denied coverage on its only product, Acthar Gel, for steroid-response. This is reminiscent of Aetna earlier this year, when the provider also denied coverage for certain indications. Luckily, Acthar is a diversified product with many uses. Therefore, the news on Thursday will most likely have limited top-line effects. The real question lies in future coverage, and whether or not other providers will follow suit. Until then the future of this fast-growing company remains a mystery, which will most likely keep shares depressed.
- After posting recent gains, shares of J.C. Penney were pushed lower following a reality check to investors. The company was named among the WSJ’s do or die of 2013 list, which pushed the stock lower. The reason this news was significant is because of the fact that it has traded higher as of late, as investors have seemingly forgotten its many problems. Personally, I agree with the WSJ’s report -- and all of the other fundamental warning signs -- meaning I prefer not to touch the stock.
All of the companies above had key developments or a catalyst that moved the direction of its stock. Looking ahead, these developments could have trend changing effects, leading to multi-day gains or losses. Therefore, I’d consider the relevance of the news when making an investment decision, and then apply the fundamentals as part of your due diligence. Then, you might just find yourself a good play to return gains in an unstable economy.
BrianNichols has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. 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!