This week’s rally has created some short-term superstars with double-digit gains across the map, but with their prices now inflated is it worth investing in them? Below, we take a look at some the week’s top performers and assess whether the companies look like a buy or have become overbought.
Nike (NKE)-Nike pushed 14 percent higher on Tuesday after its latest earnings report exceeded estimates on the bottom and top-lines. The company said that both EPS for the quarter and the year reached record highs. Increased revenue and SG&A expense leverage helped negate a lower gross margin rate. Fourth quarter revenues added 14 percent, reaching $5.8 billion. EPS for the quarter was up 17 percent to $1.24, according to the report and apparel scheduled for delivery for the remainder of the year was $10.3 billion, 15 percent higher than last year. These are impressive developments, but having already seen such significant gains this week, is Nike worth it? It looks like it. The growth and future prospects are impressive enough that its current levels which are narrowly beneath 52-week-highs, could still ascend. Citigroup (C) just adjusted Nike’s price target to $98 from its current level of around $89.
Standard Microsystems (SMSC) a designer of Smart Mixed-Signal Connectivity solutions, silicon-based integrated circuits and systems software are incorporated by a global customer base in end products in the personal computing, consumer electronics, industrial and automotive markets. The company added 10 percent following its own earnings report earlier in the week. Revenue for the first quarter 2012 was an impressive $103.5 million, a 7 percent increase from this time last year and 2 percent from last quarter. For the second quarter, the company is looking forward to an additional revenue increase of around 10 percent including $8 million from the BridgeCo acquisition. Shares of Standard Microsystems had been losing out significantly since the Japanese disaster but the company is confident that the material impacts are behind them and intend to widen their automotive and consumer revenue. Standard Microsystems has been moving only slightly higher since with increase of under one percent. The company is below its 52-week high but not by so much that it would be a safe bet. The range of options within this sector is such that the company may not see a major gain like this weeks until next earnings period.
Youku.com (YOKU) known as the Chinese Youtube, closed 30% higher earlier in the week following its official Youku Premium paid content platform . Youku is a trick stock as many are wondering if it has the potential to be a sensation like the original site it was based upong. The company did sign a digital distribution agreement with CAV, Warner Home Entertainment, Warner Bros Home Entertainment Group’s joint venture in China. The Warner Brothers deal may help the company increase content and get a better handle on how to advertise, two elements that have challenged Youku since its inception. Beneath the terms of the three-year agreement, Youku will add a total of 400 to 450 Warner Bros new releases and catalog titles to its Youku Premium content library. Even still, Youku appears to be spending a lot of money and investors are wary of Chinese stocks right now. While it may be good for a short sell, Youku looks most like a hold than anything.