Why Chesapeake Energy, Select Comfort, and GoPro Jumped Today

By Markets Fool.com


Image source: GoPro.

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Monday brought a good start to the week for investors, and U.S. stock market benchmarks generally hit new all-time record highs as a consequence. Most market participants pointed to efforts from central banks overseas to try to spur economic growth, as the Bank of England, European Central Bank, and Bank of Japan have all taken steps to try to encourage greater levels of investment. The Federal Reserve stands as a stark holdout in that process, but the U.S. economy continues to perform better than most of its international counterparts. In addition, several positive developments for individual stocks have helped bolster confidence in the overall market. Among the best performers on the day were Chesapeake Energy (NYSE: CHK), Select Comfort (NASDAQ: SCSS), and GoPro (NASDAQ: GPRO).

Chesapeake powers up on debt restructuring

Chesapeake Energy climbed 10% after the energy giant announced a couple of moves aimed at restructuring its debt. Chesapeake said it would seek to obtain a five-year secured term loan for $1 billion, with negotiations and lender commitments still pending. At the same time, it also said it would offer to use those proceeds to make tender offers for various outstanding debt issues, including short-term senior notes due over the next seven years, and two different long-term convertible senior note issues.

In general, Chesapeake is working to take advantage of favorable conditions in the debt market to restructure its loans, and shareholders are happy to see the company manage its bondholders in a way that could lead to larger profits in the long run.

Select Comfort wakes up

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Select Comfort rose 7% after getting an upgrade from analysts at Piper Jaffray. The mattress company got a boost last week when rival Mattress Firm received an acquisition bid, and some of those following the industry argued that Select Comfort might also become the target of potential international companies looking to capitalize on the U.S. consumer market. One problem with that hypothesis is that there are relatively few potential buyers that would be interested in paying the kind of premium Mattress Firm shareholders received for their shares, so it's less likely Select Comfort will attract interest after its rival's acquisition.

Nevertheless, analysts believe Select Comfort is fundamentally strong, and they boosted their price target by more than a third with the expectation that the mattress company will make shareholders happy with its results in the near future.

GoPro gives investors a clearer picture

Finally, GoPro jumped 9%. The stock has bounced back sharply after taking significant hits on worries about its future product lineup, but some investors seem to have bought into CEO Nick Woodman's confidence that the company's strategy toward releasing new versions of its Hero camera line as well as its new drone product could pay off during the coming holiday season. Nevertheless, not everyone is betting on GoPro's potential success, because the stock still has considerable levels of short interest. That can lead to greater volatility in either direction, and some have mentioned the possibility of a short squeeze as possibly being partially responsible for today's big move in the stock.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends GoPro. 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.