Why Apple, Southwest Airlines & Three Other Stocks Are in Spotlight

In contrast to its previous sessions, crude futures are abnormally calm this morning, up 0.2%, as traders look forward to today’s API inventory data release.

Among the stocks traders are talking about today are some oil sensitive names, as well as a major tech company. In this article, we analyze why Apple Inc. (NASDAQ:AAPL), Southwest Airlines Co (NYSE:LUV), Caterpillar Inc. (NYSE:CAT), ConocoPhillips (NYSE:COP), and Apache Corporation (NYSE:APA) are trending and we find out what investors tracked by our team think about them.

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).

Apple Set to Introduce Products

Apple Inc. (NASDAQ:AAPL) is in the spotlight due to its coming product event presentation in San Francisco later today. At the event, many experts expect Apple to introduce the iPhone 7, which might have a better camera and lose the headphone jack. Additional upgrades to Apple’s iOS and the Apple Watch are also expected. Given that Apple depends on the iPhone for the majority of its profits, the company’s new product specifications will be very important in terms of its future growth rate in the near term. Ken Fisher’s Fisher Asset Management owned 11.3 million shares of Apple Inc. (NASDAQ:AAPL) at the end of June.

Southwest Releases August Data

Traders are watching Southwest Airlines Co (NYSE:LUV) today after the airline released its operational statistics for August. During the last month, Southwest’s revenue passenger miles inched up by 4.1% year-over-year while its load factor declined by 80 basis points to 84.6%. Capacity for the month rose by 4.6% year-over-year. Overall, for the third quarter, Southwest expects RASM to retreat by 3.5% to 4%. At the end of June, 45 funds from our database had a bullish position in Southwest Airlines Co (NYSE:LUV), down by 13 funds from the previous quarter.

On the next page, we analyze why Caterpillar, ConocoPhillips and Apache Corporation are making headlines.

Analysts Give Thumbs Up to Caterpillar

Caterpillar Inc. (NYSE:CAT) is 1.33% in the green this morning after analysts at Deutsche Bank initiated a ‘Buy’ rating on the stock, setting a $98 price target. Although they don’t think Caterpillar’s EPS will undergo a V-shaped recovery, the analysts think 2016 will be the cyclical bottom for Caterpillar’s earnings as various beaten-up industries such as mining and Brazilian construction recover. Due to those beliefs and management’s progress in cutting costs, the analysts estimate Caterpillar will earn $4.03 per share for 2017, or over 13% above the current average estimate. The number of investors tracked by us with holdings in Caterpillar Inc. (NYSE:CAT) fell by six quarter-over-quarter to 31 at the end of June.

ConocoPhillips Upgraded

ConocoPhillips (NYSE:COP)’s shares have edged up by around 1% out of the gate after analysts at Jefferies upgraded the stock to ‘Hold’ from ‘Underperform’. The analysts like how management is cutting costs and capital expenditures to preserve the company’s balance sheet in the low oil price environment. Shares of ConocoPhillips are also in the green due to slightly higher crude prices. A total of 43 funds from our database owned shares of ConocoPhillips (NYSE:COP) heading into the third quarter, down by two from the previous quarter.

Apache Makes a Discovery

Apache Corporation (NYSE:APA) shares have surged over 10% after the oil and gas E&P announced discovering a significant new resource play, ‘the Alpine High’ in the Southern Delaware Basin. According to the company, Apache estimates the hydrocarbons in place on its positions hold 75 trillion cubic feet of rich gas and 3 billion barrels of oil in the Barnett and Woodford formation alone. Analysts estimate the new discovery could be worth $8 billion or more. Apache will dedicate more than a quarter of its capex budget to developing the resources this year. At the end of the second quarter, 33 investors tracked by Insider Monkey owned shares of Apache Corporation (NYSE:APA).

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