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Why Cree, Harsco, and Valeant Pharmaceuticals Jumped Today


Cree's lighting sets the mood. Image source: Cree.

The stock market continued its upward trajectory on Thursday, with the S&P 500 celebrating its fourth straight day of record-high closes. Economic data helped support the theory that stocks are the best investment option among major asset classes, and many investors took an unexpectedly strong rise in the Producer Price Index as evidence that interest rates won't be able to remain low forever.

The resulting drop in bond prices sent more investors to stocks, and major market benchmarks climbed about half a percent as the Dow also climbed to a new record. Many stocks helped propel the market, and Cree (NASDAQ: CREE), Harsco (NYSE: HSC), and Valeant Pharmaceuticals (NYSE: VRX) were among the best performers on Thursday.

Cree makes a sale, predicts a strong quarter

Cree picked up almost 11% after the lighting specialist made a favorable announcement concerning two different items. First, the company said late Wednesday that it had agreed to sell its Wolfspeed power and radio-frequency division to Infineon Technologies in a deal that will bring in $850 million. The two companies expect the deal to close by the end of the calendar year.

In addition, Cree announced preliminary results for its fiscal fourth-quarter revenue, saying that it expects sales of about $388 million. That's close to the top of its previous guidance range. Several analysts suggested that the advance in Cree stock was overblown, and that the company's prospects remain uncertain; but shareholders saw no reason to curb their enthusiasm, and bid shares higher.

Harsco steels up its resolve

Harsco rose more than 12% in the wake of releasing its preliminary results for the second quarter. The steel producer said that it expects to report GAAP operating income just above the breakeven mark at just $1 million. But after adjusting for a loss provision related to railway maintenance equipment contracts, Harsco's $41 million adjusted operating income was 50% to 85% higher than the previous range that the company had provided.

Harsco pointed to its metals and minerals segment as the catalyst for the strong performance, and said that its Project Orion efforts to impose operating discipline on its business internally have paid off. In addition, the company boosted its full-year guidance for operating income, and although Harsco was disappointed with the negative impact from the railway contracts, it still thinks that all of its segments have a lot of promise going forward.

Valeant finally catches a break

Finally, Valeant Pharmaceuticals gained 6%. The hard-hit drug company has taken plenty of hits lately, but investors nevertheless cheered positive comments from both its new and former CEOs that the company remains a viable and profitable business. Current CEO Joseph Papa said that he believes that Valeant's diversified product portfolio has plenty of promise, while former CEO Michael Pearson defended his sales of 4.4 million shares of Valeant stock as being "for personal reasons."

Pearson also said, "I plan on holding my remaining shares until the company recovers and returns to being traded on fundamentals." If Valeant is successful with the many compounds on which it expects to get feedback in the near future, investors hope that the stock can continue the current rebound, even in the face of massive criticism, and sales of shares by institutional investors.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Valeant Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.