Why Avis Budget Group, Depomed, and Community Health Systems Jumped Today

By Markets Fool.com


Image source: Avis Budget Group's Zipcar.com.

Continue Reading Below

This week has reminded investors that the stock market can be volatile, and although Friday's moves weren't as extreme as what the market went through earlier in the week, it nevertheless reflected the ongoing uncertainty that investors have about the future of the bull market. Major market benchmarks fell as much as half a percent, and most market participants blamed the negative move on anxiety about the Federal Reserve's monetary policy meeting next week.

Yet even though the overall market finished the week on a down note, some companies bucked the trend and saw their stocks push higher. Among the best performers were Avis Budget Group (NASDAQ: CAR), Depomed (NASDAQ: DEPO), and Community Health Systems (NYSE: CYH).

Avis Budget joins a new group

Avis Budget Group climbed 7% on a couple of pieces of positive news. First, the company's Zipcar car-sharing network said that it would launch a bicycle-sharing program on college campuses. The program, appropriately dubbed Zipbike, will seek to offer students more choices to be mobile and to cut back on traffic congestion.

Zipcar will work with industry specialist Zagster, which already operates 140 bike-sharing programs across North America. In addition to the bicycle-related news, Avis Budget's stock is also slated to join the S&P Midcap 400 index as of the closing of trading Friday, and some investors took the opportunity to get in ahead of when index funds tracking the benchmark of mid-sized companies will make their purchases.

Continue Reading Below

Depomed climbs on sale reports

Depomed picked up almost 15% in response to reports that the drug developer is looking to seek strategic alternatives, including a potential sale of the company to an acquirer. Right now, Depomed is looking forward to a court ruling on whether it will be able to maintain patent exclusivity of its Nucynta painkiller drug as long as it had hoped.Once the court makes a final decision, it could open the door for Depomed to entertain offers from would-be acquirers.

Depomed has been under pressure from activist investors to find ways to produce more shareholder value, and nervousness about relying too much on an opioid-based drug like Nucynta has some investors reluctant to have too much confidence in the treatment's future success. Nevertheless, exploring options is a smart thing for Depomed, even if it ultimately chooses to go it alone.

Community Health also looks for M&A interest

Finally, Community Health Systems gained almost 16%. The hospital operator is also reportedly looking at various options going forward, including a potential sale of the company.

Unlike Depomed, Community Health has seen its stock under considerable pressure, losing more than three-quarters of its value just in the past year. Various trends in the healthcare industry, including the ongoing impacts of the Affordable Care Act on hospitals and other healthcare providers, have raised some uncertainty about the industry, in general, and about Community Health, in particular. But Community Health has already looked at options, including a spinoff of certain hospitals, and similar future moves might also serve to unlock shareholder value.

A secret billion-dollar stock opportunity
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.