Here’s Why These Five Stocks Are Making Headlines Today

It’s a good day to be a bull on Wall Street as all three major indexes and crude futures are well in the green.

In this article, we analyze why five stocks, Smith & Wesson Holding Corp (NASDAQ:SWHC), Broadcom Ltd (NASDAQ:AVGO), Ambarella Inc (NASDAQ:AMBA), Gap Inc (NYSE:GPS), and Carnival Corp (NYSE:CCL) are in the spotlight and we use data from the latest round of 13F filings to determine what the smart money thinks about each stock.

While there are many metrics that investors can assess in the investment process, the hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor to beat the S&P 500 by around 95 basis points per month (see the details here).

Smith & Wesson Shares Decline Despite Earnings Beat

Smith & Wesson Holding Corp (NASDAQ:SWHC) earned $0.57 per share on revenues of $207 million for its fiscal first quarter, comfortably beating the consensus estimates by $0.04 per share and $8.84 million, respectively. Sales jumped by 40.1% year-over-year due to the impact from various acquisitions and strong demand. For the full year, Smith & Wesson expects earnings of $2.38 to $2.48 per share on sales of $900 million to $920 million. Despite the strong numbers, shares of Smith & Wesson are off by almost 6% as the market’s expectations were evidently higher than analyst estimates. A total of 20 funds from our database had a bullish position in Smith & Wesson Holding Corp (NASDAQ:SWHC) at the end of June, down by four funds from the previous quarter.

Broadcom Reports Earnings

Broadcom Ltd (NASDAQ:AVGO) shares are 2% in the red after the semi-conductor giant reported EPS of $2.89 on revenue of $3.79 billion for its fiscal third quarter, which were $0.12 and $30 million ahead of the consensus estimates. Gross margin from continuing operations for the period was 60.4%, versus 60% in the prior quarter and 60.7% for the same quarter last year. For the fiscal fourth quarter, Broadcom expects net revenue of $4.1 billion (+/- $75 million) and gross margin of between 59.5% and 61.5%. At the end of June, 74 funds tracked by us owned shares of Broadcom Ltd (NASDAQ:AVGO), up by six funds from the previous quarter.

On the next page, we find out why Ambarella, Gap, and Carnival Corp are trending.

Traders Sell Ambarella Despite Solid Results

Ambarella Inc (NASDAQ:AMBA) reported EPS of $0.54 per share on revenue of $65.1 million for its fiscal second quarter. The results beat the consensus estimates by $0.16 per share and $0.82 million, respectively. Gross margin rose to 67.1% from 65.3% due to strong execution and the company said it expects revenue growth for fiscal 2017 to be between flat and down by 5%. Despite the solid results, shares of Ambarella have lost 5%. Hedge funds weren’t that bullish on the tech company in the second quarter. According to our records, 13 funds were long Ambarella Inc (NASDAQ:AMBA) at the end of the second quarter, compared to 20 funds a quarter earlier.

Gap August Sales Decline

Gap Inc (NYSE:GPS) is in the spotlight today after the retailer reported soft sales numbers for August. For the four-week period ended August 27, GAP’s overall comparable sales declined by 3%, while net sales retreated by 2%. In terms of specific brands, comparable sales at Gap’s Banana Republic brand slid by 10% year-over-year, while comp sales at the Old Navy brand inched up 1%. Gap shares will need comp sales to begin improving to do well in the long run. The number of investors from our database with holdings in Gap Inc (NYSE:GPS) rose by nine quarter-over-quarter to 32 at the end of June.

Downgrade at Carnival

Carnival Corp (NYSE:CCL) shares are 5% in the red after Morgan Stanley downgraded the travel stock to ‘Underweight’ from ‘Equalweight’, citing neutral to negative booking trends in the sector in August. In addition, the analysts at the investment bank found that more travel companies were offering promotions and incentives in the time period, which is typically another indication of weaker-than-expected demand. The analysts have a $48 price target, down from their previous $54 target. Kerr Neilson‘s Platinum Asset Management owned almost 5 million shares of Carnival Corp (NYSE:CCL) at the end of June.

Disclosure: none