Here’s Why These Five Stocks Are in the Spotlight Today

With 2016 only days away, shares of Amazon.com, Inc. (NASDAQ:AMZN), Pep Boys-Manny Moe and Jack (NYSE:PBY), Apple Inc. (NASDAQ:AAPL), Alphabet Inc (NASDAQ:GOOGL), and Netflix, Inc. (NASDAQ:NFLX) are trending this morning on the back of various news. Let’s take a closer look.

In addition, let’s analyze hedge fund sentiment toward some of these stocks, if relevant. We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular small-cap stock picks in real time since the end of August 2012. These stocks have returned 102% since then and outperformed the S&P 500 Index by around 53 percentage points (see the details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.

Shares of everything-store Amazon.com, Inc. (NASDAQ:AMZN) are up by 1.21% after the company reported that its Amazon Prime membership increased by 3 million in the third week of December to a total of ‘tens of millions’. Amazon Prime offers its members free two day shipping on eligible purchases as well as unlimited streaming of many media titles in Amazon’s Prime Instant Video program in exchange for an annual fee of $99. Amazon Prime’s growth is important to Amazon.com, Inc. (NASDAQ:AMZN) because customers with Amazon Prime buy a lot more from Amazon than customers who don’t have Prime. If Amazon’s Prime subscribers grow rapidly, look for Amazon’s revenue growth to remain strong.

Pep Boys-Manny Moe and Jack (NYSE:PBY) is trending after Bridgestone increased its acquisition offer for Pep Boys to $17 a share, or $0.50 a share above Carl Icahn‘s current offer of $16.50 per share.  Although Icahn has said he will pay $0.10 per share more than any competing offer up to $18.10, Pep Boys-Manny Moe and Jack (NYSE:PBY)’s board of directors have unanimously agreed to recommend shareholders accept Bridgestone’s offer. Pep Boys shares are off by 0.74% in morning trading after the news.

Moving on, shares of Apple Inc. (NASDAQ:AAPL) are in the spotlight after the iPhone maker argued in a court filing that Samsung still owes the company $180 million for infringing on some of its patents. Samsung agreed to pay Apple $548 million earlier this month over similar issues. Despite the positive news, Apple Inc. (NASDAQ:AAPL) shares are down by 1.11% in morning trading. Because Apple is so big (with a market cap of around $600 billion), $180 million is a drop in the bucket in the grand scheme of things (it’s 0.03% of Apple’s market cap) and wouldn’t add much value to Apple’s at all.

On the next page, we examine Alphabet Inc, and Netflix Inc.

Going against the tide today is Alphabet Inc (NASDAQ:GOOGL), whose shares received the “Barron’s Lift” today after the magazine argued that Alphabet subsidiary YouTube is twice as valuable as pay internet leader Netflix, Inc. (NASDAQ:NFLX). Given that Netflix, Inc. (NASDAQ:NFLX) currently sports a market capitalization of $50 billion, the Barron’s column writer implies that YouTube is worth $100 billion, or roughly 21% of Alphabet Inc (NASDAQ:GOOGL) on an ex-cash basis. Not surprisingly, Barron’s thinks Alphabet can rally another 30% to over $1,000 per share on the back of YouTube’s large audience, and more shareholder friendly activities such as buybacks. Like Barron’s, the smart money is bullish on Alphabet, as 129 elite funds were long the stock at the end of September, up from 115 funds that owned the equity at the end of June.

Disclosure: none