Thursday, September 6, 2012

3 Stocks Stopping the Presses

You saw the headlines. You know your stock price made a big move. But what does that portend for your investment's future?

By pairing the latest news with the collective wisdom of our 180,000-strong�Motley Fool CAPS investing community, we might be able to discover whether your stock's latest exploits are a short-term hiccup -- or the start of a much bigger trend.

The following stocks have all made big moves over the past five trading days:

Stock

CAPS Rating (out of 5)

Change Past Week

Central European Distribution (Nasdaq: CEDC  ) **** 30.3%
Frontline (NYSE: FRO  ) *** (48.2%)
The9 (Nasdaq: NCTY  ) ** 29.7%

Source: Motley Fool CAPS. Change from Nov. 21 to Nov. 29.

Drink a toast to this stock
Although I've been looking for Diageo (NYSE: DEO  ) or Brown-Forman (NYSE: BF-B  ) to pour a snifter full of Polish vodka producer Central European Distribution, it turns out a Russian rival, Russian Standard Vodka, thought the 80% loss of market cap this year made the company a good value. It took a 9.9% stake in CED with the possibility of buying more -- or abandoning its claim altogether.

With rising prices across Europe, attacks on its market share undermining its leadership position, and the Russian market in the midst of upheaval, the vodka maker has many investors hoping for a buyout from someone. It's not a full takeover, but Russian Standard's access to the home market should at least stabilize CED's position there.

With 97% of the CAPS All-Stars rating CED believing it will outperform the broad indexes, it seems like they were expecting an uptick every bit as bracing as a chaser after a cold beer. Tell me in the comments section below or on the Central European Distribution CAPS page if you think this signals a U-turn for the spirits company, then put it on�your watchlist�to keep track of its progress.

Running aground
When you suggest you're going to run out of money unless industry conditions improve, as Frontline recently did, you're going to sink a few others with the news -- such as Ship Finance International (NYSE: SFL  ) , which counts the dry bulk shipper as one of its biggest counterparties. Frontline might be down 48% on the week, but Ship Finance is off an equally painful 30% over the past five trading days.

Frontline has been saying it needs to renegotiate its contracts because of the harsh pricing environment that's swamping its operations. In the third quarter, the dry bulk shipper reported wider net losses as rates are currently at operating cost levels with no contribution to capital, and vessel values have fallen 25% to 50% during the last year. Even though it has been selling assets to reduce its liabilities, a restructuring is probably going to occur sometime next year.

Frontline's current dividend represents a 2.9% yield, but CAPS member pchop123 says there's still too much risk inherent in the stock: "Tanker companies have big problems ahead so I am selling on any rises regardsless of the dividend."

Add Frontline to your watchlist and let us know on the Frontline CAPS page if you think it can make it to port safely.

Assuming a new role
Activision Blizzard� (Nasdaq: ATVI  ) recently set a new initial sales record with the release of its megahit�Call of Duty: Modern Warfare 3, but while The9 might not see numbers anywhere as large as that, its own new Firefall release has game players and investors excited at its potential. An agreement with Garena will net The9 subsidiary Red 5 Singapore $23 million plus royalties for distributing the RPG across southeast Asia.

The9 hasn't been the same since it lost the World of Warcraft license back in 2009, but Firefall has the chance to revive the once-cutting-edge gamer. Revenues fell sequentially during the first two quarters of the year, although losses narrowed. With the stock trading at less than the cash it carries on its balance sheet and a hot new property on its hands, investors are expecting the role-playing game to change roles from loser to winner.

With more than 95% of the 933 CAPS members rating The9 claiming it will beat the Street, it seems they're willing to bet it will come out on top in any shoot-'em-up. Add the stock to the Fools' free portfolio tracker to keep on top of developments as they occur.

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