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6 Biggest Market Surprises of the First Quarter

Starbucks, Sears, Apple and more take investors on a wild ride

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Surprise Face Believe it or not, springtime is upon us. Easter and Passover, April showers and a new baseball season. But before we get ready for arguably the most cheerful time of the year, let’s take a moment to sift through the notable curve balls the market served up during the first three months of 2012. We’re only 90 days into the year, and we’ve already been through a lot of shakeups. Here are a half dozen of the most memorable.

6. Encyclopaedia Britannica Goes Digital

After nearly 250 years in print, the publisher is shutting down its presses and focusing on the digital business. Those hungry for Britannica’s information can now subscribe to the online Web-based service or use a smartphone or tablet app.

On one hand, this is savvy business — after all, the number of physical volumes sold each year dropped by more than 90% from 1990 to 2010. On the other, it’s another sad sign for both journalism and the traditional publishing industries. Are bound books the new compact discs?

5. Starbucks Spreads Its Wings

For years, Starbucks (NASDAQ:SBUX) seemed content to do what it did well. Italian-inspired coffee beverages of varying complexity and expense, a comfortable environment for readers and writers, and maybe a mediocre baked good or two. But now, under the leadership of visionary CEO Howard Shultz, the Seattle-based java giant is dreaming big.

In early March, Starbucks unveiled plans for a single-cup dispenser machine, which would be in direct competition with Green Mountain Coffee Roasters’ (NASDAQ:GMCR) Keurig appliance. This shifts away from the familiar coffee shop model and potentially puts more product directly in customers’ homes or offices. The news also came as an unpleasant surprise for GMCR shareholders, as the stock took a tumble on the report. The two coffee companies do remain partners in Keurig-related ventures.

They are also moving out of the caffeinated beverage market entirely, experimenting with a line of juice stores. In addition to freshly squeezed juice options, the Evolution Fresh chain will serve soups, sandwiches, and other healthy lunch fare.

Maybe these moves will mean a whole new audience for Starbucks and a whole new way to make money. Or they could be experiments that fail by levels of”New Coke” proportion. For now, the stock is trading near an all-time high after gaining 50% in the past 12 months.

4. Sears Stock Rallies

The Sears (NASDAQ:SHLD) and Kmart brands have stifling amounts of competition. Underperforming stores are being shuttered. Earnings have been in a tailspin. And despite these formidable headwinds, the stock has managed to rally 110% in 2012.

Seemingly out of the ether, part of this buying power was likely driven by short covering, but the lion’s share of this upside can be chalked up to good old-fashioned speculation. Sometimes, there’is no rationale to the stock market. You just have to enjoy the ride and hope for occasional glimmers of good luck.

Article printed from InvestorPlace Media,

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