Volatility is taking a back seat today as all three indexes are well in the green in morning trading. Among the stocks rising pushing them upwards are Apple Inc. (NASDAQ:AAPL), Intel Corporation (NASDAQ:INTC), Lululemon Athletica inc. (NASDAQ:LULU), and The Coca-Cola Co (NYSE:KO). In this article, we will examine why each stock is on the move and analyze relevant hedge fund sentiment towards each of these equities.
Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market (see the details here). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).
Apple Inc. (NASDAQ:AAPL) is 1.5% in the green this morning as the broader market strength and an analyst upgrade ramp up demand. Despite many bearish investors speculating that iPhone sales will decline for the first time ever in 2016 and several Apple suppliers cutting their guidance numbers for the next quarter, analysts at Bank of America upped their rating on Apple to ‘Buy’ from ‘Neutral’ and assigned a price target of $130 per share on the stock. The analysts think that the potential decline in iPhone sales has already been priced in to the stock and that Apple Inc. (NASDAQ:AAPL) shares could rally given the release of an upgraded Apple Watch and the eventual launch of a new version of the iPhone. It also doesn’t hurt that Apple trades at a discount of 9.23-times forward earnings estimates and has around $200 billion of cash and investments on its balance sheet.
Hedge fund sentiment for Apple has been consistently bullish, with Apple being the second-most held smart money stock on the market. Of the 730 elite funds we track, 133 were long Apple at the end of the third quarter, with Carl Icahn‘s Icahn Capital LP and David Einhorn‘s Greenlight Capital among them.
The sell-side is warming up to Intel Corporation (NASDAQ:INTC) today, as analysts at investment bank Mizuho bumped up their rating on Intel to ‘Buy’ from ‘Neutral’ and assigned the stock a $37 price target. The analysts raised their rating because they think the chipmaker’s earnings are sustainable given the company’s dominance in the cloud and other potential growth markets. They also note that the PC’s secular decline is moderating. Perhaps following Mizuho’s lead, analysts at B. Riley and JPMorgan Chase & Co. also reiterated/initiated ‘Buy’ and ‘Overweight’ ratings on the stock respectively, with price targets of $39.50 and $40.00 per share on it. Intel Corporation (NASDAQ:INTC) shares are 1.79% higher this morning.
On the next page, we examine Lululemon Athletica inc, and The Coca-Cola Co.
Lululemon Athletica inc. (NASDAQ:LULU)‘s fundamentals are improving, as the company upped its fourth-quarter revenue guidance yesterday to $690 million-to-$695 million from the previous $670 million-to-$685 million and raised its quarterly EPS estimate to $0.78 from a range of $0.75-to-$0.78. Comparable store sales growth is expected to be in the high single-digits versus previous guidance of mid single-digit growth, due to strong holiday sales. Analysts are taking note, as Jefferies Group raised its price target to $71 from $70 and Credit Suisse upped its price estimate to $60 from $59. Lululemon Athletica inc. (NASDAQ:LULU) shares have rallied 11% so far on the good news .
The Coca-Cola Co (NYSE:KO) is 0.9% higher today because of an analyst upgrade. Because of The Coca-Cola Co (NYSE:KO)’s reasonable valuation and improving growth trends, analysts at Stifel Nicolaus raised their rating on the consumer staple to ‘Buy’ from ‘Hold’ and assigned the stock a $54 price target. Many elite funds are also bullish on the soft-drink producer’s prospects, as 54 funds owned over 11% of Coca-Cola’s float as of September 30. Warren Buffett‘s Berkshire Hathaway was the largest believer, with a holding of 400.0 million shares.