Why Investors Are Abuzz About These 5 Stocks Today

It looks like Thursday will be another good day for the markets, as all three index futures and crude are in the green. Among the stocks trending this morning are Yum! Brands, Inc. (NYSE:YUM), Bank of America Corp (NYSE:BAC), CSX Corporation (NASDAQ:CSX), Monsanto Company (NYSE:MON), and Alphabet Inc (NASDAQ:GOOG). Let’s check out why these stocks have the undivided attention of investors this morning, see how the collection of top hedge funds in our database are positioned in each stock.

At Insider Monkey, we track around 765 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).

Yum! Reports Earnings

Yum! Brands, Inc. (NYSE:YUM) is 3% higher in pre-market trading after turning in mixed earnings results for the second quarter. For the period, the company earned $0.75 per share on revenue of $3 billion, beating the consensus estimate by $0.01 per share in terms of the bottom-line, but missing top-line expectations by $90 million. Driving the bullishness is the fact that Yum’s core operating profit increased by 7%, helped in part by the company’s China division, which saw operating profits jump by 6%. Due to the strong demand, Yum expects core operating profit growth of 14% or higher for the full year, a step up from the previous guidance of 12%. Of the 766 active funds we track, 51 funds owned $4.71 billion in Yum! Brands, Inc. (NYSE:YUM) holdings on March 31, which accounted for 14.10% of the float.

Fed President Says Two Hikes May Be Needed This Year

Traders are watching Bank of America Corp (NYSE:BAC) today after Federal Reserve Bank of Philadelphia President Patrick Harker said that the U.S economy may need two interest rate hikes by the end of the year, instead of the suspected one. Mr. Harker doesn’t think the Brexit will do much damage to the U.S economy and that U.S inflation could hit 2% by 2017. Given the Brexit and the upcoming Presidential elections, many investors assumed the Fed would only raise rates in December, if at all this year. Two interest rate hikes will benefit Bank of America Corp (NYSE:BAC) and pad its net interest margin. 110 funds in our database owned shares of Bank of America Corp (NYSE:BAC) at the end of the first quarter, down by three funds from the end of 2015.

On the next page we’ll take a closer look at why CSX Corporation, Monsanto Company, and Alphabet Inc are trending this morning.
CSX Beats Estimates

Although CSX Corporation (NASDAQ:CSX) earnings may have been made public one hour earlier than estimated, the company nevertheless turned in better than expected second quarter results, with earnings of $0.47 per share on revenue of $2.7 billion, which beat estimates by $0.03 per share and $10 million, respectively. Sales fell by 11.8% year-over-year while the operating ratio rose by 210 basis points to 68.9%. Due to the strong dollar, low commodity prices, and energy market transition, management expects full year earnings per share to decline. Management is committed to achieving a mid-60’s operating ratio over the long run. 40 funds that we follow owned shares of CSX Corporation (NASDAQ:CSX) at the end of March, down by five quarter-over-quarter.

Monsanto Exploring Alternatives to Bayer

According to Bloomberg, Monsanto Company (NYSE:MON) has talked with BASF SE over a potential combination of the two companies’ agrochemicals businesses. In the proposed transaction, Monsanto would acquire BASF’s agriculture solutions unit in return for newly-issued shares of Monsanto. Given that the discussions are in an early stage, there is no guarantee of a deal coming together. Monsanto could still sell itself to Bayer, however, as Monsanto’s board has apparently been split between the two options. The number of funds in our system with holdings in Monsanto Company (NYSE:MON) rose by 13 quarter-over-quarter to 51 as of the end of March.

EU to Bring More Charges Against Google 

Per the Wall Street Journal, the EU antitrust regulator is planning to file more charges against Alphabet Inc (NASDAQ:GOOG)‘s Google division as early as today. The charges relate to Google’s shopping service and its stringent contractual terms over its advertising service. The additional charges could result in more fines and additional restrictions. Alphabet shares have been relatively flat year-to-date, falling by 5% since the beginning of the year. 155 funds in our database owned Alphabet Inc (NASDAQ:GOOG)’s Class A shares at the end of March, while 142 were owners of the stock’s Class C shares.

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