Why Gogo Inc. Stock Gained 16% in September

What happened

Shares of volatile in-flight broadband services specialist Gogo (NASDAQ: GOGO) outpaced the market last month by rising 16% compared to a 0.4% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally only offset a small portion of Gogo's recent losses, and shares remain down by more than 50% so far in 2018.

So what

Investors grew more optimistic about the business last month, with much of its gain coming after a Wall Street analyst raised his short-term earnings targets. Gogo's management has projected adjusted earnings of between $35 million and $45 million this year, but a Morgan Stanley analyst believes stabilizing business trends could power higher actual results.

Now what

Gogo's business isn't yet on stable ground. Executives are aiming to slash costs in 2018 to help the company offset losses from the challenged rollout of its next-generation broadband system. Gogo has significant debt that it must service, too, which explains why management's focus right now is on bolstering cash flow. The stock might begin looking attractive, given the slump it has endured recently, but only if the business starts showing signs of healthier sales in the context of falling costs.

10 stocks we like better than GogoWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Gogo wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.