Why Are These Hot Stocks Surging?

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Skechers USA Inc (NYSE:SKX) is up by 4.6% after falling more than 30% on Friday. Skechers’ stock fell because its third quarter revenues missed expectations by $20.36 million and its inventories rose by 38% year-over-year. Investors expected a big top and bottom line beat given the stock’s huge year-to-date rally up to that point. The selling may be a little overdone, however, as management noted that inventory buildup was consistent with fourth quarter orders. Given the forward P/E of 14.79, Skechers isn’t expensive, although the stock could take some time to consolidate its gains for a few quarters.

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Eros International plc (NYSE:EROS), a leading company in the Indian film entertainment industry, is up by 10.5% in morning trade as the stock remains volatile after Wells Fargo analyst Eric Katz said, “we still don’t know the largest content buyers driving this increase, and we aren’t fully comfortable with the fact nearly half of the revenue originates outside of India”. India is a huge growth market and its GDP per capita will rise much faster than developed countries’ GDP per capita will, but investors need to be able to verify all the numbers before the stock can rally back to its levels from earlier in the year.

Piedmont Natural Gas Company, Inc. (NYSE:PNY) is up by a stunning 38.39% after Duke Energy Corp (NYSE:DUK) announced that it will buy Piedmont for $60 in cash for every share of Piedmont stock. The deal, which includes $1.8 billion in Piedmont Natural Gas’ existing net debt, will cost Duke Energy approximately $6.7 billion and should close by the end of 2016. Eight funds that we track owned $22.15 million of Piedmont’s shares (representing just 0.80% of the float) on June 30. Among the lucky hedge fund holders was Joel Greenblatt‘s Gotham Asset Management which owned 157,969 shares at the end of June.

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Disclosure: None

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