Several Dog Stocks Are Finally Having Their Day

NEW YORK (Real Money) -- Every dog in this market does have its day. At least that's what it seems like when I look at what was running, that is, the biggest percentage gainers in the S&P 500.

Take the leader of the pack, Micron (MU), the low-cost DRAM and flash memory producer that had been so much higher but has been sliced by 50% because supply finally overtook demand in its core products.

This pummeling has seemed endless despite the fact that the company's a terrific manufacturer. Of course, one thing we know about manufacturing, if you are making commodities and the market for your commodities is in decline, tamping demand while you go full out making them, your average selling price is going to plummet and so are your earnings.

That means Micron's been a virtual falling knife. Until Tuesday, when we learned from press reports that a large Chinese concern, Tsinghua Unigroup, is readying a $23 billion bid for the company, which was worth $19 billion yesterday. Now, there are two things you need to know about this bid: First, Micron's probably worth considerably more than $23 billion if you were to build the plants it has, and second, there is enough proprietary content at Micron that the U.S. government might block the bid.

Still, Micron's been horrendous. But this dog's having its day. So is its sister dog, SanDisk (SNDK), for that matter, because it makes flash memory and it's cheap relative to where it has been as it's down 43% after repeated earnings misses. Remember, these are commodity products and when equilibrium turns into surplus, nobody's spared.

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Shockingly, even Seagate (STX) was able to rally after its bitterly disappointing preannouncement Monday. Seagate makes disk drives, commodities sold into personal computers, and if you can find a worse business other than coal, let me know. Seagate, however, does have good cash flow and there was another time when it took itself private because management felt its stock was way too undervalued. People are thinking lightning could strike again.

Then there's Urban Outfitters (URBN), a pariah among retailers that got a big upgrade from Jefferies on the strength of its brands. I was surprised to see Urban's up 4% this year given its disappointing performance. That's because there are always people who remember the three concept growth stage, Free People, Anthropologie and Urban itself, along with its direct-to-consumer channel. The story just resonated, as is often the case when something's languished and people think it's done going down.