Markets bounced back from an early morning decline amid news of important buyout deals. Among the stocks that are flying today are Jack in the Box Inc. (NASDAQ:JACK), LSB Industries, Inc. (NYSE:LXU), Infoblox Inc (NYSE:BLOX), Cheniere Energy, Inc. (NYSEMKT: LNG) and MGT Capital Investments Inc. (NYSEMKT:MGT). Let’s see why these stocks are gaining ground today and see what smart money investors think about them.
Academic research has shown that certain insider purchases historically outperformed the market by an average of seven percentage points per year. This effect is more pronounced in small-cap stocks. Another exception is the small-cap stock picks of hedge funds. Our research has shown that imitating the 15 most popular small-cap stocks among hedge funds outperformed the market by nearly a percentage point per month between 1999 and 2012 (read more details here).
Jack in the Box Beats Estimates
Jack in the Box Inc. (NASDAQ:JACK)’s stock has surged more than 14% so far today after the company posted better-than-expected financial results for its fiscal second quarter. The Sand Diego-based restaurant company reported earnings of $0.85 a share on $361 million revenue, higher than the estimates of $0.70 in EPS on revenue of $360 million. In a statement, CEO of Jack in the Box, Leonard Comma, said that healthy margins and labor cost controls resulted in better sales. The company also got huge benefits from Mexican fast-casual chain Qdoba, which it had acquired in 2003. Same store sales at Qdoba rose by 2.1% on the year. For the current quarter, Jack in the box expects a 2% to a flat decline in its same store sales amid heavy rainfall and flooding in Houston, where 17% of the company’s stores are located. Overall, 22 hedge funds from our system were positioned in Jack in the Box Inc. (NASDAQ:JACK) at the end of last year. As of the end of March, Michael Barnes and Arif Inayatullah’s Tricadia Capital Management owns 46,000 shares of the company.
LSB Industries to Sell Its Climate Control Business
Shares of LSB Industries, Inc. (NYSE:LXU) have skyrocketed by more than 37% after the company announced that it will sell its climate control business to Sweden-based company NIBE Industrier AB for $364 million. In a statement, Dan Greenwell, President and CEO of the Pennsylvania based company, said that the deal would help LSB to focus entirely on its chemical business. The company will use the cash to pay off its debt. It will have more flexibility and capital to ensure its growth in the chemical business. The deal will be closed in the third quarter of the current year. As of the end of March, Murray Stahl’s Horizon Asset Management owns 793,390 shares of LSB Industries.
On the next page, we are going to take a look at the reasons that have helped the other three stocks gain ground today.