Building Confidence and Valuation This Week: RAD, DRL, ALVR

The following three companies, Rite Aid Corporation (NYSE: RAD), Doral Financial Corporation (NYSE: DRL), and Alvarion Ltd (NASDAQ: ALVR) are all beginning the week with big volumes and sizeable gains and existing shareholders and new buyers are just loving it.

Rite Aid is the drug store chain with nearly 5,000 retail outlets that has been woefully undervalued for a very long time. The stock was trading in the $1.05 range earlier this month and is currently trading in the $1.28, a 10 day gain of 21.9%. And it looks like “The Run Up is On” as daily valuation and volume trends grow and grow. The surge is the result of the Company recently posting a smaller Q1 loss than expected. A widespread national chain with that many stores for under two bucks? That’s what’s brought the buyers in. Short sellers are headed for the exits.   

And it’s also been a very good week so far at Doral Financial which was trading at $1.60 earlier this month and is currently trading in the $2.08 range, a gain of 30% on a strong spike. There are virtually no short sellers of this stock to apply downward pressure. Doral Financial operates as a commercial banking operation primarily in Puerto Rico. When investors start buying this stock and there is a surge, there is a tremendous amount of strength of support from existing shareholders who are aggregating; who ‘believe’.

So too with Alvarion; the wireless company. Its shareholders also appear to jump into a rally and push up valuations. This stock was trading at $2 five months ago and slid down to $1.20 earlier this month, a loss of 40%, but the stock rallied at that point and rose to $1.39, a 15.8% gain in a week. After a little normal profit taking, the stock has dropped seven cents. The good news at Alvarion is that the Company has virtually no short sellers and just signed a big deal for wireless connectivity in Eastern Europe and Russia. 

I haven’t, don’t, and do not intend on holding any of the companies mentioned in this article (although I do get my prescriptions filled at Rite Aid).