Wash. Rinse. Repeat. The Dow Jones Industrial Average is making hitting new highs look easy these days, and no longer does it have to make dramatic jumps to do so, either. Simply tacking on a few dozen points daily is enough to do the trick. Yesterday’s 50-point gain to close above 14,447 marked yet another new record and represented the index’s seventh straight day of gains as a solid jobs number last week seemed to indicate the economy had really made a turn.
We’ll see, but the three stocks below had their own reasons to celebrate, although you should 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, because without a fundamental basis for the bounce, these stocks could just as quickly make the return trip down.
|Dex One Corporation (NYSE:DEXO)||18.6%|
|Research In Motion Ltd (NASDAQ:BBRY)||14.1%|
|MannKind Corporation (NASDAQ:MNKD)||11.4%|
Who’s got short shorts?
While there was no company specific news to account for the rise of Dex One Corporation (NYSE:DEXO), a local business marketing service similar to Yelp Inc (NYSE:YELP), its stock is up 45% since a recent low at the end of February and it may be going through a short squeeze.
According to data provided by the Nasdaq exchange, Dex One had more than 10.1 million shares sold short as of Feb. 28, representing almost 22% of its float. With low average daily trading volumes, the business promoter had a short interest ratio of an astounding 78 days to cover. That means it would take about two and a half months to completely buy back all the shares sold short. The Motley Fool believes anything over seven days is a lot.
A short squeeze becomes a vicious cycle feeding on itself. As more shorts cover their positions, it drives the price higher, forcing more shorts to do the same. Where it stops, no one knows but Dex One Corporation (NYSE:DEXO) seems to be in the middle of one that just might have some legs. Of course, when it’s over it still remains the business that will determine its price and heretofore the market hasn’t been willing to accord it much of a valuation.
How do you say BlackBerry in Mandarin?
As the second largest computer maker with a 14.8% share of the global PC-shipments market last year, Lenovo has its sites firmly set on overtaking top-seated Hewlett-Packard Company (NYSE:HPQ), which has a 16% share. It’s also the eighth largest handset maker, according to ABI Research , and it wants to vault into the top ranks buying out BlackBerry, the former Research In Motion Ltd (NASDAQ:BBRY). At least that’s what investors are hoping happens.
Lenovo’s CEO said a takeover of the smartphone maker “could eventually make sense” in the scheme of opportunities for external growth and another company executive had made similar rumblings back in January. So with the launch of its new BB10 operating system and AT&T Inc. (NYSE:T) ready to launch its new BlackBerry Z10 touch-screen smartphone on March 22, the handset maker has seen its shares jump 16% over the past week — and they’re up 25% over the last three months.