Here’s Why These Five Stocks Are Trending

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It’s another quiet day on Wall Street as all three indexes and crude futures are close to flat.

Among the stocks showing more volatility are Francesca’s Holdings Corp (NASDAQ:FRAN), The Valspar Corp (NYSE:VAL), HD Supply Holdings Inc (NASDAQ:HDS), Western Digital Corp (NASDAQ:WDC), and Sprouts Farmers Market Inc (NASDAQ:SFM). Without further ado, let’s take a closer look at why each stock is in the spotlight and see what the smart money investors from our database think about the companies in question.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see the details here).

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Francesca’s Beats

Francesca’s Holdings Corp (NASDAQ:FRAN) shares have surged this morning after the company reported better-than-expected earnings for its second quarter. During the quarter, Francesca’s earned $0.27 per share on revenue of $115.26 million, beating the consensus estimates by $0.09 and $6.1 million, respectively. Sales rose 8.7% year-over-year, while comparable sales were flat compared to the same period of the last year. Gross margin was 46.8%, down slightly from 47.4% a year ago.  For the full fiscal year ending January 28, management expects net sales in the range of $473 million to $488 million and EPS between $0.96 and $1.03. Jim Simons’ Renaissance Technologies raised its stake in Francesca’s  Holdings by 23% to over 1.8 million shares  in the second quarter.

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Valspar Turns In Mixed Results

Although its fiscal third quarter earnings of $1.57 per share were ahead of analyst estimates by $0.12 per share, The Valspar Corp (NYSE:VAL)‘s revenue of $1.14 billion missed the consensus estimate by $40 million. Valspar sales inched lower by 0.9% year-over-year, as total volumes went up by 2% and foreign exchange had a negative 2% impact. Adjusted EBIT rose 7% as adjusted EBIT margin jumped to 15.2% from 11.7% over the year. Among the funds in our database, 25 funds owned shares of The Valspar Corp (NYSE:VAL) at the end of June, down by three funds from the previous quarter.

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On the next page, we take a closer look at HD Supply Holdings, Western Digital Corp, and Sprouts Farmers Market.

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