Among the biggest winners in Wednesday's early trading are
Solarfun Power (Nasdaq: SOLF)
,
Hercules Offshore (Nasdaq: HERO)
and
U.S. Airways (
LCC
)
.
|
Top Percentage Gainers -- Wednesday, May 26,
2010
|
|
Company Name (Ticker)
|
Intra-Day Price
|
Intra-Day
% Gain
|
52-Week High
|
52-Week Low
|
| Solarfun Power (Nasdaq: SOLF) |
$7.12 |
+13.6%
|
$10.78 |
$4.48 |
| U.S. Airways (
LCC
) |
$8.65 |
+10.8%
|
$8.77 |
$2.00 |
| Hercules Offshore (Nasdaq: HERO) |
$3.10 |
+7.1%
|
$7.28 |
$2.60 |
|
*Table includes companies with minimum market
capitalizations of $200 million and three month trading
volumes of at least 100,000 shares. All percentage returns
are listed as of 10:55AM Eastern Standard Time . Click on
ticker symbols for up-to-the-minute price quotes and
percentage gain data.
|
Solarfun Rebounds
We took a look at
Solarfun Power (Nasdaq: SOLF)
last week as shares were slumping to new lows. At the time, it
looked as if investors had lost all faith in this and other solar
names, focusing solely on the near-term challenges instead of the
long-term opportunities. Well, Solarfun insists the near-term isn't
all that bad, either. The provider of solar power equipment posted
first-quarter profits on Wednesday that were more than double the
forecasts. Equally important, management boosted full-year sales
guidance, which refutes the notion that demand in the sector has
fallen off a cliff. And that's good for a +13% pop in shares this
morning.
But it may be time to book quick profits if you picked up shares in
last week's sell-off. That's because investors are likely to
question whether the all-important German market will drag down
sector results later this year when solar subsidies expire. Make no
mistake: this is a stock and a group to own for the long-haul, but
there is just too much cynicism about the short-term.
Action to Take -->
You need to be nimble with this whole group. These stocks rise and
sink fast, and it's proven to be wise to sell into rallies and buy
into dips. Right now, they are in rally mode. If you hold a
long-term view, sector valuations look quite compelling, and these
stocks can be bought and held.
-------------------------------------
Bottom-Fishing among the Drillers
With all of the uncertainty surrounding the long-term impact for
Gulf Coast drilling, a wide range of firms providing drilling
equipment and services have sold off sharply in recent sessions.
Yet they are posting a heady rebound today, as investors try to
find which names have been oversold. For example, shares of
Hercules Offshore (Nasdaq: HERO)
are up roughly +7% after losing nearly -40% of their value since
late April. Other beaten down-names such as
Seadrill (Nasdaq: SDRL)
,
Rowan (
RDC
)
, and
Pride International (
PDE
)
are all up in the +3% to +5% range.
But it seems too early to sound the all-clear on this group. Over
time, the industry will be back on its feet, probably after
additional safeguards are put in place to avoid a repeat of the
current catastrophe. But in the near-term, virtually all new
permitting efforts are likely to be on hold, and investors should
brace for possibly lowered guidance from a number of these firms as
the second quarter proceeds.
Action to Take -->
This is purely about time frames. Many of these stocks are off -30%
or even -40% from their peaks, and will likely be back at their
current 52-week highs in a few years. But in the near-term, the
negative news on the group will likely continue, especially since
the Obama administration is feeling the heat to get tougher on this
industry. So buy for the long-term promise, not the short-term
gain. However, as a minor caveat to that view: if
BP (
BP
)
is successful in this week's efforts to stanch the flow of leaking
oil and gas, the whole group could see a powerful relief rally. But
if the recent past is any guide, there is not a high degree of
optimism for the current well-capping efforts.
-------------------------------------
U.S. Airways Continues to Rise
Shares of
U.S. Airways (
LCC
)
posted strong gains Tuesday on the heels of an analyst upgrade, and
they are rising another +10% today. At around $8.50, shares still
lag the $11 price target offered by JP Morgan. The boost in the
target price comes after oil prices have steadily fallen. U.S.
Airways had neglected to protect itself with fuel price hedging,
and thus will see the biggest drop in expenses from oil moving
below $70.
The move underscores how the whole airline industry is hostage to
oil prices. When oil moved past $100 a barrel a few years ago, many
carriers moved into the red. Conversely, when oil prices slump
sharply, it's a sign that global economic concerns are dominant. So
oil below $50 a barrel usually means that demand for air travel is
weak. Right now, oil prices are in a "Goldilocks" phase.
Action to Take -->
Airline stocks can prove to be a bit dicey right now. Many carriers
derive a decent chunk of revenue from European routes, and as
Priceline (Nasdaq: PCLN)
recently warned, global air travel looks set to slow down. In
contrast, the U.S. air travel market looks fairly healthy. And that
favors U.S. Airways,
JetBlue (Nasdaq: JBLU)
, and
Southwest (
LUV
)
, which have very little international exposure. In light of
Europe's nascent crisis, these domestic-focused carriers are the
names to own right now.
-- David Sterman
Contributor
StreetAuthority
Disclosure: David Sterman does not own shares of any security
mentioned in this article.