The markets dropped yesterday as the clock ticks down on the deficit reduction supercommittee's deadline, but just because your stock strapped on a rocket pack and went even higher, you need to resist the urge to high-five everyone in the cubicles next to you. Smart investors won't celebrate until they know that upward leap was justified. Without a fundamental basis for the bounce, these stocks can quickly make the return trip down.

Is now the time to lock in profits, or is this just the first step toward even higher valuations down the road? Let's examine several stocks that just hit the afterburners, and see whether they're truly headed into orbit.

Stock

CAPS Rating (out of 5)

Thursday's Change

Rambus (NAS: RMBS) ** 23.5%
ZOLL Medical (NAS: ZOLL) **** 22.9%
Lihua International (NAS: LIWA) ** 10.3%

Source: Motley Fool CAPS.

With the Dow falling another 135 points yesterday, or 1.1%, stocks that went appreciably higher are pretty big deals.

What goes down must come up
Just like that, Rambus shows up on the big-bounce list following its crushing court defeat at the hands of Micron Technology (NAS: MU) and Hynix Semiconductor. Not that it bounced all the way back -- it's still more than 50% below where it was before the ruling -- but the latest price action suggests investors think the battle is not yet over as there is still an appeals process to test.

It also suggests that investing in Rambus at this point means you're betting on the whims of the judiciary system to make the company whole. That sounds more like gambling to me than investing. As Rambus die hards will tell you, the evidence they presented against Micron was very strong, yet the jury still decided against the company. Perhaps a disinterested appeals judge will be more accommodating, but you still have to think your investment won't be doing much until a decision is ultimately rendered, and that will almost certainly be many months down the road.

Rambus investors are certainly patient, having waited years for the decision handed down the other day. CAPS member wh00dat thinks the original sell-off was too much and plans to use the intervening time to trade off its expected rise:

60% drop is fever level insanity. I jumped in at 7.17 and am already up. I think it will settle off at 8-9 the next few days and I'm looking forward to maximizing returns through options sales during a slow rise back to 12-15 in the coming months.

Let us know in the comments section below or on the Rambus CAPS page whether you think it has a good chance of winning on appeal.

New life for this stock
Fourth-quarter results from defibrillator maker ZOLL Medical seem to have resuscitated hopes that proposed Medicare cuts won't go through. Last quarter, ZOLL showed strong sales for its wearable LifeVest defibrillator, but still watched its stock plunge on fears the Centers for Medicare & Medicaid Services wouldn't offer reimbursements for the device.

Management says the cardiology profession fully supports the LifeVest and that it's confident CMS will eventually make the right choice. In the meantime, LifeVest sales jumped 52% in the quarter and were up 57% for 2011.

However, is there a clock ticking on ZOLL, as well as other device makers such as Boston Scientific (NYS: BSX) and Stryker (NYS: SYK) ? As part of health-care reform, an excise tax on medical devices expected to cost device makers $20 billion over 10 years -- mind you, it's a tax on sales, not profits -- will take effect in 2013, and the fallout has already begun. Stryker has already said it is cutting its workforce by 5% and will restructure its business to save $100 million ahead of the tax being imposed, and Boston Scientific is eliminating 1,200 to 1,400 jobs and moving business to China.

While manufacturers will simply pass along the costs to consumers, thereby raising medical costs not cutting them, it means the reimbursement decision by CMS will be even more critical for ZOLL. With 95% of the CAPS members rating the defibrillator maker to outperform the market, it seems they think it will be able to navigate the challenging situation.

Tell us on the ZOLL Medical CAPS page or in the comments section below if you think new taxes will send medical device makers into cardiac arrest, then go add it to your watchlist to see how it plays out.

Not all that glitters is gold
I found no company-specific news to account for troubled Chinese copper products maker Lihua International jumping yesterday. The heavily shorted stock -- 18% of its float is sold short with a heavy short interest ratio of 24 days -- has been dogged by concerns about the credibility of its corporate-governance practices, though no allegations of fraud have been leveled against it.

Copper prices are reeling alongside fears of the European financial contagion spreading to the United States. Metal prices in general are being weighed down by a lack of confidence in Europe's ability to contain the crisis, but Freeport-McMoRan (NYS: FCX) at least thinks copper's scarcity will eventually drive prices higher, and it is investing some $2 billion on exploration.

Lihua's earnings report last week seemed to show a growing business, with revenues up 61% from last year and net income 37% higher. It was enough to induce the company to offer not one but two special dividends to shareholders for $0.03 a share each, one to be paid in January and a second to come in April. CAPS member supaflylob is duly impressed:

cant say anything bad about this stock. fundamentals improving. massive breakout today. exelent ROE. great technicals. strong buy

Add Lihua International to the Fool's free portfolio tracker to see if this copper products maker can overcome the strong reservations some investors hold.

Going into orbit
It pays to start your own research on these stocks on Motley Fool CAPS, where you can read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from the stock's CAPS page. Then you can decide for yourself whether your stock's headed for re-entry, or off to infinity and beyond.

At the time this article was published Fool contributor Rich Duprey owns shares of Boston Scientific, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold. Motley Fool newsletter services have recommended buying shares of Stryker. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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