Navellier & Associates’ Top Five Stock Picks of Q3

The bull market has resumed its course, thanks to the cheap money mode of the world’s biggest economies. Hence, it seems that now is the opportune time to consider pouring some money into stocks. At the same time, the 13F filings for the third quarter keep flowing, which could pinpoint some great buying opportunities for the upcoming months and years. Having said that, this article will discuss the top five stock picks of Navellier & Associates at the end of the third quarter and their performance during the disappointing three-month period. The investment firm founded by Louis G. Navellier in 1980 undertook a significant re-balancing process in the third quarter, so its top picks might be quite worthwhile for an average investor.  Meanwhile, the market value of its portfolio decreased to $993.17 million from $1.14 billion quarter-over-quarter. The Insider Monkey team has also discussed Louis Navallier’s bets on the technology sector, an ever-changing industry full of opportunities.

But why do we track hedge fund activity? From one point of view we can argue that hedge funds are consistently underperforming when it comes to net returns over the last three years, when compared to the S&P 500. But that doesn’t mean that we should completely neglect their activity. There are various reasons behind the low hedge fund returns. Our research indicated that hedge funds’ long positions actually beat the market. In our back-tests covering the 1999-2012 period hedge funds’ top small-cap stocks edged the S&P 500 index by double digits annually. The 15 most popular small-cap stock picks among hedge funds also bested passive index funds by around 53 percentage points over the 3 year period beginning from September 2012 (read the details here).

#5 CVS Health Corp (NYSE:CVS)

Shares Owned by Navellier & Associates (as of September 30): 301,935 shares

Value of Holding (as of September 30): $29.13 million

Drugstore giant CVS Health Corp (NYSE:CVS) retained its spot in the list of five top stock picks of Navellier & Associates even though its shares lost nearly 8% during the third quarter. The investment firm trimmed its position in the company by 46,791 shares during the recent quarter, which might be seen as a premature move considering that the stock has gained more than 8% since the end of September. Just recently, the company opened its 1,000^th walk-in medical clinic MinuteClinic, which serves as a reminder of its successful growth over the years. However, a new trend of home drug delivery services might represent a strong threat for the company. Cliff Asness’ AQR Capital Management was the largest shareholder of CVS Health Corp (NYSE:CVS) among the hedge funds tracked by our team at the end of the second quarter with 4.8 million shares.

#4 Apple Inc. (NASDAQ:AAPL)

Shares Owned by Navellier & Associates (as of September 30): 274,145 shares

Value of Holding (as of September 30): $30.24 million

Apple Inc. (NASDAQ:AAPL) represents a new addition to the aforementioned list. Navellier & Associates increased its holdings in the tech giant by 19,969 shares during the third quarter, which accounted for 3.04% of the firm’s portfolio on September 30. The shares of Apple declined almost 12% during the latest quarter and are now slightly over 4% in the red year-to-date. Earlier this week, Apple announced two programs meant to reduce the carbon emissions in China and green its suppliers in the nation. Additionally, the tech giant announced the completion of 40 megawatts solar projects in the Sichuan Province. Thus, these steps might attract some climate-aware investors to pour cash into the stock, but also reduce the criticisms on the company’s “polluter” partners. Carl Icahn of Icahn Capital LP is very bullish on Apple Inc. (NASDAQ:AAPL), owning 52.76 million shares as of June 30.

#3 Anthem Inc. (NYSE:ANTM)

Shares Owned by Navellier & Associates (as of September 30): 219,679 shares

Value of Holding (as of September 30): $30.76 million

Anthem Inc. (NYSE:ANTM) represented the fifth-largest holding of Navellier & Associates at the end of the second quarter, but it climbed a few positions on the list during the latest quarter. However, the investment firm slightly decreased its stake in the health benefits company, which did not have a great quarter in terms of stock performance. Its shares lost more than 14% over the three-month time span. A recent article published by Reuters states that presidential candidate Hillary Clinton is alarmed by Anthem’s proposal to acquire CIGNA Corporation (NYSE:CI), claiming that the deal should be thoroughly reviewed by regulators. Let us remind you that Anthem agreed to purchase CIGNA for $47 billion earlier this year, a deal that could create the largest health insurer by membership in the United States. Larry Robbins’ Glenview Capital was one of the top stockholder of Anthem Inc. (NYSE:ANTM) at the end of the June quarter with a stake of 4.62 million shares.

#2 Avago Technologies Ltd (NASDAQ:AVGO)

Shares Owned by Navellier & Associates (as of September 30): 251,490 shares

Value of Holding (as of September 30): $31.44 million

Avago Technologies Ltd (NASDAQ:AVGO) also represents a new addition to Navellier & Associates’ list of top five stock picks for the fourth quarter. The investment firm reduced its position in the chip supplier for Apple’s iPhones by 5,985 shares during the recent three-month period. Earlier this year, the company announced a merger agreement with Broadcom Corporation (NASDAQ:BRCM), under which Avago is set to acquire Broadcom in a cash and stock deal. This transaction might create one of the most diversified communications platforms in the semiconductor industry. Meanwhile, the shares of Avago lost 5.66% during the third quarter, but are still up 24% year-to-date. Andreas Halvorsen’s Viking Global added a 4.77 million-share position in Avago Technologies Ltd (NASDAQ:AVGO) during the second quarter.

#1 Dr Pepper Snapple Group Inc. (NYSE:DPS)

Shares Owned by Navellier & Associates (as of September 30): 410,275 shares

Value of Holding (as of September 30): $32.43 million

Dr Pepper Snapple Group Inc. (NYSE:DPS) is the largest holding of Navellier & Associates at the end of the third quarter, accounting for 3.27% of its portfolio. The stock climbed on the top of the list, thanks to its strong performance during the latest quarter. In fact, the shares of manufacturer of non-alcoholic beverages gained 9% during an ugly quarter and are currently trading at an all-time high of nearly $90. Just recently, the company disclosed its third-quarter earnings report, posting net sales of $1.63 billion, which were up 3% year-over-year. At the same time, its earnings per share came to $1.05, up 9% year-over-year. Mario Gabelli’s GAMCO Investors owned 1.90 million shares of Dr Pepper Snapple Group Inc. (NYSE:DPS) at the end of the second quarter.

Disclosure: None