Five Stocks that Are Surging While the Market is Mired in Red

Investors are nervous today after the jobs report brought forward mixed employment data. Non-farm payrolls were below expectations, raising concerns over the possibility of the Fed further raising interest rates this year. In this article we’ll take a look at some of the stocks that are in green territory despite the broader concerns, driven by positive earnings reports. Those stocks are Symantec Corporation (NASDAQ:SYMC), USG Corporation (NYSE:USG), Lumentum Holdings Inc (NASDAQ:LITE), Tyson Foods, Inc. (NYSE:TSN), and Ubiquiti Networks Inc (NASDAQ:UBNT). We’ll also take a look at how confident smart money was about these stocks prior to their latest earnings reports.

At Insider Monkey, we track around 730 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 more details about our small-cap strategy).

Symantec Corporation (NASDAQ:SYMC) is trending higher this morning after a positive quarterly report that surpassed Wall Street’s expectations. For the fiscal third quarter of 2016, ended January 1, the company registered revenue of $909 million, beating estimates of $905.6 million, while adjusted earnings came in at $0.26 a share, slightly above analysts’ consensus of $0.24 per share. Symantec’s forward guidance for the current quarter is in line with analysts’ expectations, as it eyes earnings of $0.24-to-$0.27 per share. The company also provided investors with some additional good news: it has declared a special dividend of $4.00 per share for shareholders of record on March 8, a share buyback program worth up to $2.3 billion, and a $500 million investment from Silver Lake Partners, one of the largest tech investors in the world. Shares of Symantec are up by more than 4% today.

The Symantec Corporation (NASDAQ:SYMC) fan club gained some new members during the third quarter, as the number of hedge funds in our database which were invested in it rose to 38 by the end of the quarter, from 25 a quarter earlier. Billionaire Ken Griffin is bullish on this stock, having boosted his stake by 53% to 9.43 million shares as of the end of September.

Investors are pleased with USG Corporation (NYSE:USG)‘s fourth quarter results, pushing the stock higher by 6% so far. The manufacturer of building materials reported a profit of $812 million, while a year before it posted a loss. In per share terms, earnings stood at $0.42, while analysts were projecting earnings of $0.30 per share. Revenue came in at $925 million, failing to meet expectations of $946.6 million. Full-year results seem to have tipped the balance towards the positive side, as USG reported revenue of $3.78 billion and earnings of $6.73 per share, sending the stock higher.

At the end of September, roughly 32% of USG Corporation (NYSE:USG)’s outstanding stock was held by 28 hedge funds followed by Insider Monkey. Legendary investor Warren Buffett is keeping tabs on this stock, as Berkshire Hathaway reportedly holds a little over 39 million shares as of the end of the third quarter.

Shareholders of Lumentum Holdings Inc (NASDAQ:LITE) are also enjoying 6% gains, as the company reported better-than-expected results for the fiscal second quarter of 2016, as well as a positive outlook that surpassed expectations. The manufacturer of optical and photonic products reported a $2.8 million profit, which translates into $0.31 per share when adjusted for one-time costs, beating Wall Street’s consensus of $0.28 a share. Revenue rose by 3.7% year-over-year to $218.3 million, topping analysts’ forecasts of $217 million. For the current quarter, Lumentum expects to earn between $0.28 and $0.34 per share, not accounting for some costs, higher than analysts’ expectations of $0.25 per share.

The number of Lumentum Holdings Inc (NASDAQ:LITE) shareholders in our system stood at ten following the third quarter, during which time the company had its IPO. George Soros‘ Soros Fund Management holds a sizable stake in the company, having reported ownership of 1.46 million shares in its latest 13F filing.

The gains for shareholders of Tyson Foods and Ubiquiti Networks are looked at on the next page.

The future is bright for Tyson Foods, Inc. (NYSE:TSN) as well, at least in the short term, as the largest U.S meat processor posted a profit of $461 million for the first quarter of fiscal year 2016. On a per share basis, earnings came in at $1.15, while revenue fell by 15% to $9.15 billion. An increase in the domestic supply of cattle and hogs drove prices down, but lower cord and soybean prices meant cheaper feed, thus a decrease in costs, which also led to an increase in profit margin. Tyson Foods also upped its full-year profit expectations to $3.85-to-$3.95 per share, having previously issued an estimate of $3.50-to-$3.65 per share. Investors are euphoric, having pushed the stock higher by more than 13% in the first hours of trading.

David Cohen and Harold Levy, the managers of Iridian Asset Management, nearly tripled their holding of Tyson Foods, Inc. (NYSE:TSN) during the third quarter, taking it to a little over 6.5 million shares.

One of the top gainers today is Ubiquiti Networks Inc (NASDAQ:UBNT), which has surged by as much as 25% after better-than-expected second quarter of fiscal year 2016 results. The manufacturer of wireless networking products posted earnings of $0.58 per share, beating the Street’s estimates of $0.51 per share. Revenue rose by 5.7% to $161.9 million, topping analysts’ forecasts of $155.3 million. For the current quarter, Ubiquiti expects revenue of $160 million-to-$170 million, while earnings are estimated to be in the range of $0.53 to $0.60 per share.

Ubiquiti Networks Inc (NASDAQ:UBNT) is not a very popular stock among elite funds, with only ten of them having reported a stake in the company as of the end of September. The largest stake in Ubiquiti among the funds we follow is held by Akre Capital Management, run by Charles Akre. According to its latest 13F filing, the fund holds 2.68 million shares, unchanged over the third quarter.

Disclosure: None