Here’s why Salesforce, PG, Wal-Mart, and Two Other Stocks Are Trending Today

All three indexes are in the green on Wednesday as traders anticipate the Federal Reserve to keep interest rates steady during today’s FOMC meeting. Among the stocks in the spotlight today are Wal-Mart Stores, Inc. (NYSE:WMT), Co (NYSE:PG), Abercrombie & Fitch Co. (NYSE:ANF), salesforce.com, inc. (NYSE:CRM), and United States Steel Corporation (NYSE:X). Let’s uncover the reasons why investors are buzzing about these stocks today and see the hedge fund sentiment towards them.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 700 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).

A Wall Street Journal Article Shines a Light on Wal-Mart and P&G’s Relationship

Wal-Mart Stores, Inc. (NYSE:WMT) and Procter & Gamble Co (NYSE:PG) are in the spotlight after the Wall Street Journal published an article entitled, ‘Wal-Mart and P&G: A $10 Billion Marriage Under Strain’. In the article, the Journal notes that Wal-Mart is making increasingly disadvantageous moves against P&G, including featuring a European competitor next to P&G’s Tide detergent, assigning less shelf space to Proctor’s brands, selling more of its private label brands, and pressuring P&G to cut prices. Given that Wal-Mart and P&G have long had a synergistic relationship, Wal-Mart’s moves are a bad sign for P&G, which generated roughly $10 billion in revenue at Wal-Mart stores last year. If the retailer does not change its policies, P&G may have to spend more on advertising to maintain its revenues and its future growth might not be as healthy as analyst are expecting now. Wal-Mart’s moves also illustrate how the company is adjusting to an increasingly competitive retail sector led by the emergence of Amazon.com, Inc. (NASDAQ:AMZN). Of the 766 funds in Insider Monkey’s database, 54 funds had a long position in Wal-Mart Stores, Inc. (NYSE:WMT) at the end of the first quarter, up by five from the previous quarter, while 59 top funds were long Procter & Gamble Co (NYSE:PG), an increase of seven funds over the quarter.

On the next page, we examine Abercrombie & Fitch, salesforce.com, and United States Steel Corporation.
Abercrombie & Fitch Rises on Upgrade

Abercrombie & Fitch Co. (NYSE:ANF) is almost 5% higher after analysts at Deutsche Bank upgraded the stock to ‘Hold’ from ‘Sell’, noting that much of the bad news such as promotional pressure and softer traffic has been priced in. Although Deutsche Bank expects the clothing retailer to earn $1.02 per share for fiscal year 2017 versus the consensus of $1.14 per share, the investment bank also lifted the price target to $20 from $18.62 per share. The number of funds we track with holdings in Abercrombie & Fitch Co. (NYSE:ANF) rose by two quarter-over-quarter to 31 at the end of March.

BMO Gives Thumbs Up to salesforce.com

Shares of salesforce.com, inc. (NYSE:CRM) are in the green after analysts at BMO initiated coverage on the stock with an ‘Outperform’ rating and a $98 price target. The analysts like CRM’s brand, cost, and sales advantages versus other SaaS vendors, and also note that customers generally like the company’s well integrated products. Shares of the cloud software company have advanced by 5% year-to-date and 63 funds from our database were long salesforce.com, inc. (NYSE:CRM) at the end of March.

Analyst Upgrade United States Steel

United States Steel Corporation (NYSE:X) shares have surged by over 8% after analysts at Bank of America Merrill Lynch upgraded the stock to ‘Neutral’ from ‘Underperform’, and raised their price target to $18 from $10 per share. The analysts note that the forecasted higher sheet steel prices could help stabilize earnings at the steel producer over the coming quarters. Shares of United States Steel have more than doubled year-to-date. Among the funds we track, 28 funds owned $230.25 million worth of United States Steel Corporation (NYSE:X)’s stock, which accounted for 9.80% of the float on March 31, versus 22 funds and $66.41 million, respectively, a quarter earlier.

Disclosure: none