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Palm, Zanett: Week's Big Volume Movers

NEW YORK ( TheStreet) -- Stocks trading for less than $5 can experience large percentage moves on heavy volume for any number of reasons. TheStreet's Dollar Store examines some of this week's biggest under-$5 stock movers and the catalysts for the trading action.

Palm (PALM) shares surged more than 33% during the week to climb to more than $5 as takeover rumors once again swirled. On Friday, Taiwanese newspaper Economic Daily was the source of the latest takeover rumor, which said that HTC was considering an acquisition of Palm. Earlier in the week, Palm rallied after renewed market chatter of a buyout by PC maker Lenovo.

The rumors sparked heavy trading volume in Palm during the week, with 83.3 million, 46.4 million and 62.6 million shares changing hands on Wednesday, Thursday and Friday, respectively. Compare that with Palm's 50-day average daily share volume of 24.5 million.

Takeover rumors are nothing new to Palm investors. Motorola (MOT), Dell (DELL) and Hewlett-Packard (HPQ - Get Report) have all been labeled as suitors for Palm at one time or another. In late 2009, when Palm shares traded north of $10, speculators had Nokia (NOK - Get Report) buying the struggling handset maker. Nokia was also rumored to be interested in Palm back in 2007; Palm shares were closer to $20 at that time.

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At this point, a buyout may be Palm's only saving grace. Last month, Palm said revenue in the fourth quarter would come in at less than $150 million, compared with the analyst target of $305 million on March 18. Several analysts either downgraded the stock or reduced their stock price targets, questioning how long the nearly $600 million Palm has in the bank will last. One analyst even reduced his price target to zero.

"Clearly we've hit a speed bump. No question about it," Palm CEO Jon Rubinstein told Fortune last week. "It's really disappointing, and it's frustrating. ...We do have $590 million in the bank, and we have a plan that carries this company forward."

For now, the takeover rumors are buoying the stock price. But if the speculation doesn't pan out like the Nokia-for-Palm rumors of 2007 and 2009, traders had better enjoy the run while it lasts.

Zanett's (ZANE) management needs to learn a thing or two about consolidating its press releases. If Zanett could deliver all of its news at once, perhaps the company would face less scrutiny from angry traders who are calling it another pump-and-dump candidate.

On Tuesday, Zanett said it signed $17.1 million in new business during the first three months of 2010. Shares of Zanett soared higher by more than 75%, as volume topped 10.7 million shares, more than 10 times normal amounts. Zanett issued a press release with the news using excitable terms such as "Wow!" and "business is booming!" and "barely keep up with the demand."
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CIGX $0.00 0.00%
DELL $0.00 0.00%
ZANE $0.07 0.00%
HPQ $12.27 0.00%
NOK $5.87 0.00%


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