Here’s Why These Five Stocks Are in the Spotlight

A spate of earnings reports have done little to move the indexes much in either direction today, as broader index volatility remains low.

In this article, we’ll examine why Godaddy Inc (NYSE:GDDY), Crown Castle International Corp (NYSE:CCI), Baker Hughes Incorporated (NYSE:BHI), Chevron Corporation (NYSE:CVX), and Johnson Controls International plc Ordinary Share (NYSE:JCI) are trending this morning. We’ll also use 13F data to determine how successful hedge funds have been trading the five equities.

At Insider Monkey, we track over 750 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).

Godaddy Inc (NYSE:GDDY) shares are in the red after James Cakmak of Monness Crespi downgraded the stock to ‘Neutral’ from ‘Buy’. Although he expects solid results from the company’s upcoming earnings report, Cakmak sees limited upside due to the company’s valuation. Godaddy shares are up by more than 11% year-to-date so far. Of the 749 hedge funds that we track which filed 13Fs for the June quarter, 23 funds owned $1.07 billion worth of Godaddy Inc (NYSE:GDDY) shares on June 30, which accounted for 21.40% of the float.

Crown Castle International Corp (NYSE:CCI) is in the spotlight after the company agreed to buy FPL FiberNet Holdings, LLC and certain other subsidiaries of NextEra Energy Inc (NYSE:NEE) for $1.5 billion in cash. Crown Castle’s management expects the deal to be immediately accretive to AFFO per share upon closing, which should occur in the first-half of 2017. “The addition of FiberNet’s complementary footprint in top metro markets in South Florida and Texas bolsters our fiber available for small cells in markets where we see significant demand from our wireless carrier customers,” Crown Castle’s CEO Jay Brown said. Jim Simons‘ Renaissance Technologies cut its stake in Crown Castle International Corp (NYSE:CCI) by 60% in the second quarter to 833,400 shares as of June 30.

On the next page we’ll examine why Baker Hughes, Chevron, and Johnson Controls are trending.

Although it is currently 2% in the red due to some profit taking, Baker Hughes Incorporated (NYSE:BHI) received the thumbs up from Argus today, as analyst Bill Selesky raised his price target on the stock to $65 from $56 and maintained his ‘Buy’ rating on the name. Selesky expects the combination of Baker Hughes and General Electric Company (NYSE:GE)’s oil and gas unit to better compete against Schlumberger Limited. (NYSE:SLB) and Halliburton Company (NYSE:HAL) due to various synergies and GE’s digital tech, which is widely regarded as cutting edge among analysts. The number of funds in our database with holdings in Baker Hughes Incorporated (NYSE:BHI) rose by one quarter-over-quarter to 44 at the end of June.

A day after Goldman Sachs gave the integrated producer its stamp of approval, rival investment bank Morgan Stanley has also upgraded Chevron Corporation (NYSE:CVX), as analyst Evan Calio upgraded the stock to ‘Overweight’ from ‘Equal Weight’ and set a $130 price target on it. Calio believes Chevron’s free cash flow will benefit from major project ramp-ups such as Wheatstone and Gorgon, and that the free cash flow increase will help sustain the company’s dividend growth. The analyst also thinks Chevron has the best short-cycle opportunity worldwide given its assets in the Permian. 47 funds that we track owned shares of Chevron Corporation (NYSE:CVX) at the end of June.

Johnson Controls International plc Ordinary Share (NYSE:JCI) shares are almost 2% in the green after Joe Ritchie of Goldman Sachs upgraded the stock to ‘Conviction Buy’ from ‘Buy’ and reiterated his $46 price target on it. Ritchie believes Johnson Control’s fundamentals are on an upward trend, given the company’s attention to costs and its solid execution. The analyst also likes Johnson Controls’ inexpensive valuation and thinks organic growth could cause the stock to rally. 32 funds in our system had a long position in Johnson Controls International plc Ordinary Share (NYSE:JCI) at the end of June, up by five funds from the end of March.

Disclosure: None