Etsy, EA, and Avis (CAR) Among 5 Stocks Trending Early Wednesday

The U.S. dollar is stronger in early Wednesday activity as traders look forward to today’s release of the domestic employment report. With the bulk of the second quarter earnings season now over, many investors are more confident about the strength and sustainability of the U.S. economy’s growth rate.

In this article, we’ll examine five stocks that are trending among the stronger dollar backdrop this morning. They are Biogen Inc (NASDAQ:BIIB), American International Group Inc (NYSE:AIG), Etsy Inc (NASDAQ:ETSY), Avis Budget Group Inc. (NASDAQ:CAR), and Electronic Arts Inc. (NASDAQ:EA). We’ll also use SEC filings to determine what the smart money thinks of each stock.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 765 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).

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Potential M&A in Pharma Sector

Biogen Inc (NASDAQ:BIIB) is in the spotlight after the stock surged by over 9% on Tuesday on the back of a Wall Street Journal article stating that Merck & Co., Inc. (NYSE:MRK) and Allergan plc Ordinary Shares (NYSE:AGN) were both interested in buying the company. Given that its shares are off considerably from their high of around $500 per share last year, Biogen’s stock is arguably vulnerable to a take-over offer. Interest rates are also low, meaning that an acquisition could potentially be accretive for the buyer. Despite the two conditions, the potential for a take-over is not guaranteed, as communication between the suitors and their target has been preliminary and informal and Biogen’s management may not be interested in selling the company. Hedge funds were slightly less bullish on Biogen Inc (NASDAQ:BIIB) in the first quarter, as the number of funds in our database with holdings in Biogen Inc (NASDAQ:BIIB) fell by seven quarter-over-quarter to 64 as of the end of March.

AIG Reports Strong Results

American International Group Inc (NYSE:AIG) is in the green in extended market trading after the insurer reported earnings of $0.98 per share for the second quarter, beating the average analyst estimate by $0.05 per share. AIG’s property and casualty adjusted combined ratio was 89.5, versus 94.6 a year earlier, and book value per share when excluding AOCI and DTA, but including dividend growth, was $61.78, up by 5% during the quarter. The company’s Board authorized the repurchase of an additional $3 billion worth of common stock, which currently amounts to about 5% of the float. Carl Icahn‘s Icahn Capital LP was one of the top shareholders of American International Group Inc (NYSE:AIG) at the end of March, with a stake of over 44 million shares.

On the next page we’ll find out why Etsy, Avis Budget Group, and Electronic Arts are trending today.

Etsy Rises on Earnings Report

Etsy Inc (NASDAQ:ETSY) shares are 5% higher after the e-commerce company reported its second quarter results. For the period, Etsy lost $0.06 per share, missing the consensus mark by $0.05, but reported revenue of $85.35 million, which beat estimates by $4.8 million. Although Etsy’s bottom-line was weak, traders chose to focus more on the company’s strong revenue growth of 39.1% year-over-year and strong guidance. Due to robust demand, management increased its full-year outlooks on revenue growth, GMS growth, and adjusted EBITDA margin, to ranges of 25%-to-28%, 15%-to-17%, and 13%-to-14%, up from the previous guidance figures of 25%, 15%, and 10%-to-11%, respectively. 15 funds in our system owned shares of Etsy Inc (NASDAQ:ETSY) at the end of the first quarter, up by two funds quarter-over-quarter.

Avis Misses but Issues Strong Guidance

Avis Budget Group Inc. (NASDAQ:CAR) earned $0.63 per share in the second quarter, on sales of $2.24 billion, missing profit estimates by $0.06 per share but beating revenue expectations by $30 million. Revenue rose by 3% during the quarter as volume and Americas pricing showed some improvement. Despite the earnings miss, shares of Avis are in the green in the pre-market hours, aided by Avis Budget Group’s management increasing its 2016 adjusted EBITDA estimate to $850 million-to-$900 million and its adjusted EPS target to $2.90-to-$3.30. 25 of the 766 active funds that we follow were long Avis Budget Group Inc. (NASDAQ:CAR) at the end of March.

EA Posts Double Beat

Electronic Arts Inc. (NASDAQ:EA) turned in a surprise adjusted profit of $0.07 per share for its first quarter of fiscal year 2017, beating estimates by $0.09 per share. Sales also came in higher than expected, with Electronic Arts reporting revenue of $682 million, topping estimates of $650.66 million. Management sees fiscal year 2017 revenue coming in at around $4.75 billion and GAAP diluted EPS coming in around the $2.56 mark. Shares are down by 2.47% in pre-market trading despite the easy double beat, as the full-year guidance figures may have disappointed. Stephen Mandel‘s Lone Pine Capital cut its position in Electronic Arts Inc. (NASDAQ:EA) by 71% during the first quarter to slightly under 2.00 million shares as of March 31.

Disclosure: None