Over the past two months these three companies have risen by over 15% in share price, I want to look at the reasons why.
James Hardie Industries plc (ASX: JHX) is a building materials producer. It's up 16.9% over the past two months from $11.60 to $13.57 and set a new 52-week high yesterday at $13.99 before pulling back.
The company is continuing its daily share buyback, with an announcement stating it has plans to buy up to around 21 million more shares, which is about 5% of the number outstanding when it reported its half-year results in September 2013.
The majority of its revenue comes from the US, and the housing market has mostly recovered from the fear of the GFC, so the stock is reacting favourably. The slow but sure revival of the Australian housing market is adding to that, with building approvals starting to increase.
The two markets together are a big plus for the company. Other building materials major CSR Limited (ASX: CSR) also hit a new yearly high this week, and Boral Limited (ASX: BLD) has been on the rise too.
Oz Minerals Limited (ASX: OZL), the copper and gold producer in South Australia, is now up 44.5% from two months ago and 12.65% yesterday. It just announced its 2013 full-year results, reporting an underlying NPAT of minus $62.5 million, and after $231.9 million in asset write-downs, the statutory NPAT was a loss of $294.4 million.
Regularly, that wouldn't send a share price soaring, but the company also re-affirmed the previous FY2014 guidance of raising copper production up to 75,000 – 80,000 tonnes. By 2015 copper should be in excess of 105,000 tonnes. Gold is expected to be 130,000 – 140,000 oz. in 2014 as well
The company is considering selling equity in its Carrapateena project also in South Australia. A major company would be interested in buying a controlling interest and being the main operator, Oz Minerals CEO Terry Burgess said.
Also, this move may attract takeover offers for the company. These two announcements may be the reason for the sudden share price jump.
David Jones Limited (ASX: DJS) the department store operator, has gone up 18.4% over the past two months and it hasn't reported holiday season sales figures yet.
The revelation that it was approached by Myer Holdings Ltd (ASX: MYR) in November about a possible merger, and did not disclose this to the market was surprising enough, but now on top of that the news that two directors were buying shares after the approach and before quarterly results were released has riled shareholders.
CEO Paul Zahra, popular because he was turning around the sales with new promotions and omnichannel marketing, had already announced his resignation for unrelated reasons. However, it was announced that it's the chairman Peter Mason as well as the two directors in question who will now be leaving over the merger offer silence and trading in company shares.
Shareholders want Zahra to stay and with Mason heading out he could continue the new business strategies he oversaw. This gives the share price a shot in the arm. If the company announces promising sales figures from the holiday season, then it could get another boost.
Foolish takeaway
When I look over share price movements, I use sudden rises not as buying signals, but something to attract my attention and focus on the company in question and its industry. I may find an even better stock pick amongst one of its competitors, or find out something new about the market conditions.
These stocks could be down by the same amount over the next six months, so nothing is guaranteed. The goal is to invest in quality companies and take advantage of short-term market sell-offs.
