Why These Five Stocks Are Trending Today

The US stock market is trading lower on Wednesday amid lower oil prices and in-line August payroll figures reported by Automatic Data Processing.

In this article, we examine why five companies, Dollar General Corp. (NYSE:DG), Palo Alto Networks Inc (NYSE:PANW), Express Scripts Holding Company (NASDAQ:ESRX), H & R Block Inc (NYSE:HRB), and AstraZeneca plc (ADR) (NYSE:AZN) are in the spotlight today. In addition, we’ll take a look at what the smart money investors from our database think about these companies.

At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).

Analyst Downgrade at Dollar General 

Dollar General Corp. (NYSE:DG) shares are nearly 3% in the red after analysts at Atlantic Equities downgraded the stock to ‘Neutral’ from ‘Overweight’. The analysts also cut their price target to $78 per share from the previous $99 per share, citing difficulty deciphering the company’s short-term outlook. Dollar General Corp. (NYSE:DG)’s stock has taken it in the chin a couple times after reporting disappointing top- and bottom-line numbers for its second quarter. Super-discount stores generally don’t do as well if the economy is strong and consumers have more to spend. Of the around 750 top funds we track, 53 funds were long Dollar General Corp. (NYSE:DG) at the end of June, unchanged from the previous quarter.

Palo Alto Falls Due to Earnings

Palo Alto Networks Inc (NYSE:PANW) has lost 8% today after the company reported in-line fiscal fourth quarter earnings of $0.50 per share. The tech company also reported revenue of $400.8 million, up by 41.2% year-over-year, and $11.1 million better than the consensus estimate. Billings increased by 45% year-over-year and the company’s board authorized a $500 million buyback program. Fiscal 2017 EPS is expected  between $2.75 and $2.80. Palo Alto Networks Inc (NYSE:PANW) shares are likely down today because market expectations were higher than analysts’ estimates. Karthik Sarma‘s SRS Investment Management established a new position of around 1.0 million shares in the tech company in the second quarter.

On the next page, we find out why Express Scripts Holding Company, H & R Block, and AstraZeneca are trending.

Policy Change at Express Scripts

Express Scripts Holding Company (NASDAQ:ESRX) is in the spotlight after the pharmacy benefits manager promised it to implement a program in 2017 that caps spending per patient for various diabetes drugs. Given that diabetes can lead to more costly diseases if not controlled, it is in Express Scripts’ best interest to keep their customers as healthy as possible by ensuring compliance and affordability. Express Scripts’ goal is to limit the rise in diabetes drug costs for its customers to around half of the industry forecast (which is currently 18% for 2017). A total of 51 funds from our database had a bullish position in Express Scripts Holding Company (NASDAQ:ESRX) at the end of June, down by six funds from the previous quarter.

H & R Block Misses, Shares Down 10%

H & R Block Inc (NYSE:HRB) lost $0.55 per share on revenue of $125.18 million for its fiscal first quarter, missing the estimates by $0.02 and $7.44 million, respectively. Although the fiscal first quarter typically represents less than 5% of annual revenues for the company, traders nevertheless sold first and asked questions later. It remains to be seen whether H & R Block’s subsequent quarters will follow the same pattern of under-performance. At the end of June, 20 investors tracked by us owned shares of H & R Block Inc (NYSE:HRB), unchanged over the quarter.

AstraZeneca Settles 

AstraZeneca plc (ADR) (NYSE:AZN) is trending after it settled a foreign bribery case with the SEC for $5.5 million. Regulators were originally investigating the drug company for potentially making improper payments to various healthcare officials in Russia and China to boost sales. By settling the case, AstraZeneca puts to bed a risk factor and improves focus on its core operations. The number of funds from our database long AstraZeneca plc (ADR) (NYSE:AZN)  went up by six to 24 during the April-June period.

Disclosure: none