2 ASX 300 gainers and one loser of the week

The S&P ASX 300 Index (ASX: ^XKO) had a fairly decent rise in the past week, up 3.2% to end at 5,251. The Aussie dollar held at about $0.88 to the US dollar until it ticked up to $0.89 on Friday. The US Fed began a little tapering from its regular treasuries buying and the US market took it as a sign that the economy can start taking off the training wheels because business is strong enough once more.

Amongst the week’s gainers were-

Energy Resources of Australia (ASX: ERA): + 30% ($1.33).

On 7 December there was a spill of radioactive acid from a chemical leaching tank at the Ranger mine site, which prompted a government order for a complete production shutdown until the integrity of the plant can be shown to regulators.

On 10 December the share price had fallen to $1. The company said it has a sufficient stockpile of processed uranium to meet all sales commitments in the first-half of FY 2014. However, the financial effect of this incident on full-year earnings is still being assessed. The share price has returned roughly to where it was before the accident occurred.

Monadelphous (ASX: MND) +21% ($18.10).

Following the downtrend that many mining related engineering and services companies have experienced, the company’s stock price was sent to a low of $14.63. But each day last week the price gained until recovering back to around $18.00.

The company did announce $100 million in contract extensions for continued work in PNG and Darwin last week. The full extent of what the mining pullback will mean for second-half FY 2014 still has to be seen, but the market might be feeling around for a bottom here.

The week’s losers (ASX: WTF) – 38% ($2.53).

The company flagged a fall in FY 2014 first-half earnings, down as much as 20% from the prior half year’s NPAT of $27.5 million. It explained that hotel accommodation bookings are down about 5%, but flight reservations and gains from its launch of dynamic packaging should substantially offset this. Nevertheless, the share price fell under $3 on Wednesday, and kept sliding, even passing its 2008 GFC bottom of $2.75.

The company is having to compete with a stronger Flight Centre (ASX: FLT) this year. Its business model is going through a transformation that has to keep it up-to-date with other accommodation and flight holiday reservation companies. Wotif’s original niche market was the last-minute booking of available hotel rooms at discounted prices, but competition is moving in. The changes it’s making now will take some time to bear fruit, but until then the market is showing no patience or sympathy.

Foolish takeaway

This is like the end of the first-half of a game. Though there may have been good gains or heavy setbacks, there is still one more half to be played before the game can be settled. Investors will need to be diligent in following these stories because the two gainers were more like “recoverers” – getting back to where they were. We all know what a “dead cat bounce” or a “sucker rally” are, so you have to stay abreast with the news and reports to judge if the second half will offer anything better.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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