For the past month, as the markets have created new all-time highs, there have been numerous stocks to rally under the radar. What might have been top-market news in years past has gone unnoticed, and as a result, I am looking at three stocks that have exploded higher to determine the reason and whether or not each is a buy, hold, or sell!
On April 24 I tweeted that Advanced Micro Devices, Inc. (NYSE:AMD) was presenting value after earnings that were better than feared, and that I was buying at $2.54. Since then, the stock has rallied 65%, and although I sold at $3.60, this is a stock that continues to exceed logic with a continued uptrend.
If we look at the company’s quarterly report, its revenue declined 31% and it posted a net loss, yet both were better than the consensus. This is a stock that had lost 70% of its value in the previous year (prior to this recent rally) and had dirt-low expectations. Now, after newly launched chips, buyout rumors, and upgrades, the stock is trading with a great deal of volume.
As we look at the valuation, Advanced Micro Devices, Inc. (NYSE:AMD) is still not profitable but is trading with a very cheap price/sales ratio of just 0.57. Even after its large gains it is still trading at just 50% of 2012’s highs, and I think it is very possible that we see a Groupon Inc (NASDAQ:GRPN)-like performance, which includes a bounce from lows and then consolidation. I think it’s very possible that Advanced Micro Devices, Inc. (NYSE:AMD) will see a pullback at some point, and at that point, I would be a buyer, making Advanced Micro Devices, Inc. (NYSE:AMD) a “buy.”
Too Much Risk Makes this Stock a Dangerous Buy
After years of pessimism and fears of being nationalized, shares of the National Bank of Greece (ADR) (NYSE:NBG) have rallied 75% in the last month. On Monday it traded higher by another 13% on no news, with many believing that it’s still in a post-announcement trend higher after raising enough private capital to avoid being nationalized.
This is a company that is still deeply troubled and is at the epicenter of an economic collapse. With that said, most investors remember the quick 200%-400% gains realized in shares of Bank of America Corp (NYSE:BAC) and Citigroup Inc (NYSE:C) following post-recession lows in 2009. Thus many may be trying to play the bottom of European banks with the end of European Austerity.
In my opinion, many of these European banks are so debt-ridden and junked that fundamentals can barely be realized. Thus I say this rally is a “sell,” and believe that a much better play would be the Greece ETF, in which National Bank of Greece (ADR) (NYSE:NBG) makes up 7.2% of the holdings. I’d view this as much safer versus a full investment in a volatile and troubled bank.
An Online Company that Continues to Turn the Page
There’s no one who has been more critical of Travelzoo Inc. (NASDAQ:TZOO) than me. I have often used Travelzoo Inc. (NASDAQ:TZOO) as an example of “misleading management” following Ralph Bartel’s 2.5 million share sell for an average price of $75. However, after a year of flat trading, and two surprising quarters, I said back on April 23 that it is very possible that Travelzoo has turned the page.
The company grew 5% year-over-year in Q4 and then 7% in Q1, showing an acceleration of growth. The company continues to grow in both North America and Europe with a large subscriber base. With that said, the stock has rallied almost 40% since the day prior to Q1 earnings (April 17), and is what I consider fairly valued with a P/E ratio of 23.0. Therefore, I believe that TZOO is a “hold.” I think the company is making progress and that significant upside could be created if this progress is sustainable. The big question is regarding the company’s sustainability, and unfortunately, it is a question that no one knows an answer.
Conclusion
Each of these companies has seen large increases in valuation over the last few weeks and has done so under the radar. I have given my outlook for each, however I suggest further due diligence by those who may be interested in an investment, as such stocks have a tendency of producing continued gains as new investors begin to notice the performance.
The article Controversial Stocks Trade Higher: Buy, Hold, or Sell? originally appeared on Fool.com and is written by Brian Nichols.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
