Bouncing Back with Strength, Support, and Aggregation: DRRX, DRL, FBC

While the broad markets today have helped Doral Financial Corporation (NYSE: DRL), Durect Corporation (NASDAQ: DRRX), and Flagstar Bancorp Inc (NYSE: FBC), new shareholders and the ‘Faithful’ are responsible for the comebacks. 

Let’s start with Flagstar Bancorp as its bounce back has been very definite, very strong so far. The Company was trading in the $1.80 range in the first week of March, and then began drifting down, eventually falling to $1.18 earlier this month, a loss of 34% in three months. But new buyers and aggregating by ‘Faithful’ shareholders pushed the shares back up to its current level of $1.37, a gain of 16%. And the shares are up again today with a little help of the broad markets. Flagstar Bancorp has virtually no short sellers to apply downward pressure and has positive, double digit EPS projections. The Company has 165 banking centers and I think it’s undervalued below $2. I also think this rally has some legs and the stock can get to $2 in the near term (3 mos).

I also like the strength of the three bounce backs staged by Durect Corporation in the last month. Resistance is key to finding a bottom to rally from and I think Durect shareholders have fought back at every downturn. Short sellers of this stock are fewer than normal and the Company has positive sales and EPS projections. The stock is currently trading in the $2.91 range after a little profit taking yesterday. The bio pharmaceutical company has a number of drugs in Phase III and Phase II trials in its pipeline. Good news from management could easily push the stock over $3.25 in the near term.

And sticking with bounce backs that show some real support, Doral Financial Corporation drifted down from $1.60 at the beginning of the year to $1.10 in mid April, and then surged to $2.18 at the end of last month. The mortgage investment company did give up a lot of its gains this month, but has rallied back to its current $1.74 range, and is in the black today. The stock has gained 8.75% since the beginning of the year. Not bad considering its first three months. If shareholders and new buyers keep buying and the broad markets can hold a little bullish sentiment, I think the shares could easily retake $2 in the near term.