Hello again, Fools. I’m back to call attention to three stocks that popped last week. Why? Because after a given stock soars over a short period, one of two things usually happens: it keeps on flying as short-term oriented traders look to pounce on the momentum; or it pulls back sharply as cautious investors look to lock in profits.
Fundamentals count most over the long run, of course. But knowing how to “play” short-term spikes can help boost your performance significantly.
Without further ado, let’s review.
Leading off our list is copper miner First Quantum Minerals (TSX:FM), whose shares popped 11% last week.
First Quantum has been struggling with volatile copper prices and regulatory issues abroad, but recent results are fueling optimism over a prolonged turnaround. Adjusted earnings for Q4 clocked in at $198 million versus a loss of $115 million in the year-ago period. Moreover, the company posted full-year record copper production of 158,000 tonnes, up 17% from the year prior.
“2019 will be another important year for the Company,” said Chairman and CEO Philip Pascall. “With Cobre Panama starting operation, and the continuing steady production from our existing mines, we expect significantly higher output.”
Even with last week’s surge, First Quantum shares are off 33% from their 52-week highs.
Next up we have oil and gas services specialist Keyera (TSX:KEY), which popped 10% last week.
Most of the gain came on Friday in response to the company’s strong full-year results. In 2018, Keyera generated earnings of $394 million versus $290 million in 2017. More important, distributable cash flow came in at an impressive $638 million, which management used to deliver about $360 million in dividends to shareholders. That represents a highly comfy payout ratio of 56%.
“Although our industry continues to face a number of challenges,” said President and CEO David Smith. “Keyera’s foundation is strong and we are well positioned to capitalize on the long-term growth opportunities within the Western Canada Sedimentary Basin.”
With the stock still offering a juicy (and safe) yield of 5.6%, there should be plenty of room left to run.
Rounding out list is Torex Gold Resources (TSX:TXG), whose shares soared 14% last week.
Gold stocks, in general, have rallied nicely in recent months, but Torex’s recent results are giving it a particularly big boost. For the full-year 2018, Torex delivered record gold production of 353,947 ounces — the top end of its guidance — with all-in sustaining costs of $964 per ounce.
“With a strong foundation of a splendid asset and team, and the potential of a proprietary game changing technology, we have lifted our eyes to the horizon and like what we see,” wrote President and CEO Fred Stanford.
On the other hand, Torex shares are now up more than 120% from their 52-week lows, so taking some profits off the table might be prudent.
The bottom line
There you have it, Fools: three red-hot stocks worth checking out.
As always, they aren’t formal recommendations. Instead, view them as a starting point for further research. Momentum stocks are particularly volatile, so extra caution is required.
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Brian Pacampara owns no position in any of the companies mentioned.