Here’s Why These Five Stocks Are Trending on Tuesday

After having opened close to flat, all three major indexes are in the red as traders weigh in the effect of a potentially stronger dollar due to the upcoming interest rate hikes over the next four quarters.

In this article, we find out why Abercrombie & Fitch Co. (NYSE:ANF), G-III Apparel Group, Ltd. (NASDAQ:GIII), Potash Corporation of Saskatchewan (USA) (NYSE:POT), Agrium Inc. (USA) (NYSE:AGU), and Micron Technology, Inc. (NASDAQ:MU) are making headlines today. In addition, we are going to assess the hedge fund sentiment towards each stock.

At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).

Abercrombie Misses Estimates

Abercrombie & Fitch Co. (NYSE:ANF) shares are 18% in the red today after the retailer reported a loss of $0.25 per share for its second quarter, missing the consensus estimate by $0.05 per share. Revenue for the time period was $783.2 million, down by 4.2% year-over-year due to a 4% decline in same-store sales. The outlook is also disappointing, as Abercrombie & Fitch’s management expects comparable sales to remain challenging for the second half of the year due to traffic weakness in domestic malls and lower tourism caused in part to the strong dollar. Of the around 750 elite funds we track, 30 funds had a bullish position in Abercrombie & Fitch Co. (NYSE:ANF) at the end of June, down by one from the previous quarter.

G-III Reports Earnings

G-III Apparel Group, Ltd. (NASDAQ:GIII) lost $0.03 per share on revenue of $442.3 million in its second quarter, down markedly from $0.27 in EPS and $473.9 million in sales reported for the same period of the last year. Sales fell by 7% year-over-year and gross margin inched lower by 30 basis points as softness continued in the retail outlet environment. Similar to Abercrombie, G-III’s outlook is a little disappointing. The company’s management expects full fiscal year earnings of $2.16 to $2.26 per share, versus the previous range of $2.55 to $2.65, while revenue is seen coming in at $2.48 billion, down from the previous $2.56 billion. David Keidan‘s Buckingham Capital Management raised its stake in G-III Apparel Group, Ltd. (NASDAQ:GIII) by 26% to 763,624 shares during the second quarter.

On the next page, we examine Potash Corporation of Saskatchewan, Agrium, and Micron Technology.

M&A Rumors Ignite Potash Stocks

Potash Corporation of Saskatchewan (USA) (NYSE:POT) and Agrium Inc. (USA) (NYSE:AGU) shares are up by 13.4% and 8%, respectively, after Bloomberg reported that the companies are said to be in advanced talks over a potential merger. Both Potash Corp and Agrium are major players in the potash market and a combination of the two would give each more pricing power to lift potash prices higher. Potash prices have been in a bear market due to weakness in demand from traditional growth markets of India and China. Although the potential merger between the two could fall apart at any time, a merger deal could be struck as soon as next week. A total of 32 funds from our database were long Potash Corporation of Saskatchewan (USA) (NYSE:POT) and 18 funds were long Agrium Inc. (USA) (NYSE:AGU) at the end of the second quarter.

Analyst Upgrade At Micron 

Analysts at Morgan Stanley are fans of Micron Technology, Inc. (NASDAQ:MU) today after the investment bank raised its 12 month price target to $20 from $18 per share and maintained its ‘Overweight’ position. The analysts believe the key to Micron stock moving higher will be ‘company-specific execution, where we look for 2 key transitions to gradually improve in costs, realized prices, & EPS’. Our data shows that the smart money was more bullish on Micron Technology in the second quarter. The number of funds tracked by us with holdings in Micron Technology, Inc. (NASDAQ:MU) rose by 16 quarter-over-quarter to 67 at the end of June.

Disclosure: None