Why Liquidity Services, Inc. Stock Gained 12% Last Month

By Markets Fool.com

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What happened

Shares of liquidation specialistLiquidity Services, Inc.(NASDAQ: LQDT) surged last month as the company got a boost from a new contract with Indassol on the last day of the month, helping to give the stock double-digit gains for September. According to data from S&P Global Market Intelligence, shares finished the month up 12.4%.

LQDT data by YCharts.

So what

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The stock jumped more than 4% on Sept. 30 as Liquidity Services reported signing an agreement with Indassol, an industrial asset consultancy firm with offices in Dublin. Indassol's assets will be sold on GoIndustry DoveBid, a Liquidity Services marketplace where more than $1 billion worth of industrial assets have been sold. The value of Indassol's assets to be sold on Liquidity Services' site is unclear.

The Sept. 30 spike capped off a five-day run during which the stock gained 9%, accounting for the vast majority of its September pop and sending it to a 52-week high.

Now what

October has not been as kind to Liquidity Services as the stock has already given back its September gains, falling more than 12% as of writing. There was little news prompting the sell-off, but it was a reminder that Liquidity Services remains a volatile stock as shares have fallen sharply since 2012 after a post-recession spike. With analysts expecting losses for this year and next, a pullback after the recent rally seems justified.

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Liquidity Services. 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.