Pier 1 Imports (NYSE: PIR) hit the rock bottom price of 10 cents per share in early March as the market bottomed.
Now two months later, PIR trades around $2.00 per share. In early May, the stock gained more than 10% as it regained compliance with the New York Stock Exchange.
I can appreciate the enthusiasm for PIR and its turnaround play, but there is still a lot of risk here.
When a bear market ends, stocks at the bottom of the barrel often see violent bounces to the upside. Most of this is caused by shorts that pummeled the stock on the way down covering positions and locking in gains.
It would be a mistake to see these moves as anything but inefficient. As such, the volatility can and should be traded for maximum gain.
I would take what the market has given, because the market can easily take it away. I expect PIR to give back these gains as enthusiasm wanes.
Up next: Consumer stock #3.
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