Here’s Why Investors Are Watching Caterpillar, Sensata Technologies & Three Other Stocks

The US stock market is mixed on Friday, as investors await the conclusion of the Fed’s FOMC two-day meeting that started today and amid a drop in crude futures below $43 per barrel.

Viking Therapeutics Inc (NASDAQ:VKTX), Caterpillar Inc. (NYSE:CAT), Sensata Technologies Holding N.V. (NYSE:ST), Ally Financial Inc (NYSE:ALLY), and McDonald’s Corporation (NYSE:MCD) are trending today for various reasons. In this article, we examine why traders are buying and selling the five stocks and take a look what the hedge funds and other investors tracked by our team think about the companies in question.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 700 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).

Viking Rises on Positive Proof-of-Concept Results

Nano-cap Viking Therapeutics Inc (NASDAQ:VKTX) shares are in the green today after a proof-of-concept showed positive top-line results in which the company’s product candidate VK0214 rapidly reduced plasma very long chain fatty acid levels by more than 25% in treated animals compared with vehicle controls. The study achieved its primary objective of lowering plasma VLCFA levels after six weeks of treatment and the company plans to present detailed results at an upcoming scientific meeting. None of the elite funds we track owned shares of Viking Therapeutics Inc (NASDAQ:VKTX) at the end of March. As with all nano-caps, traders should do due-diligence both buying and selling.

Caterpillar Beats 

A few days after Komatsu bought out Joy Global, Caterpillar Inc. (NYSE:CAT) reported solid second-quarter results with EPS of $1.09 on sales of $10.34 billion, beating the consensus estimates by $0.13 per share and $280 million, respectively. Caterpillar beat estimates largely because management was successful in controlling costs and improving efficiency. Despite the beat, weak global macro-economic conditions will likely still weigh on the company’s results. Management sees 2016 revenue coming in at the bottom of the previously guided range of $40 billion to $42 billion, at around $40-$40.5 billion. Management also expects full-year profit coming in at around $2.75 per share in terms of GAAP earnings and at around $3.55 per share, when excluding restructuring costs. The number of investors from our database with holdings in Caterpillar Inc. (NYSE:CAT) rose by six to 37 during the first quarter.

On the next page, we examine why Sensata Technologies Holding NV, Ally Financial, and McDonald’s Corporation are in the spotlight.

Sensata Delivers Solid Quarter

Sensata Technologies Holding N.V. (NYSE:ST) shares have appreciated by nearly 5% so far today after the tech company reported earnings of $0.73 per share for the second quarter, exceeding the average analyst estimate by $0.01 per share. Revenue rose by 7.4% year-over-year to $827.55 million, or $4.14 million higher than the top-line consensus estimate. Gross margin and operating margin increased by 230 basis points and 340 basis points, respectively, as demand for the company’s products was strong. Management sees 2016 adjusted EPS in the range of $2.80 to $2.94 on sales of $3.17 billion to $3.25 billion. At the end of March, 31 funds tracked by us were long Sensata Technologies Holding N.V. (NYSE:ST).

Ally Earnings Ahead of Estimates

Traders are watching Ally Financial Inc (NYSE:ALLY) today after the company reported EPS of $0.54 and sales of $1.36 billion for its second quarter. Shares of the company are 1.5% higher as analysts were expecting $0.03 per share and $30 million less, respectively. Adjusted tangible book value rose to $25.90 from $23.70 one year ago, while Ally’s adjusted efficiency ratio came in at 43.7% versus 45.6% in the second quarter of 2015. According to our records, 51 funds owned shares of Ally Financial Inc (NYSE:ALLY) at the end of the first quarter.

Investors Not Loving McDonald’s Quarter

Given the company’s previous string of earnings beats, McDonald’s Corporation (NYSE:MCD) disappointed its most ardent bulls today by reporting second-quarter earnings of $1.25 per share on revenue of $6.27 billion, missing the bottom-line estimate by $0.13 per share and meeting the top-line analysts’ expectations. Shares of the restaurant chain are down by over 4% today as a strong dollar caused the company’s revenue to just come in-line.  Global comparable sales rose 3.1% year-over-year while U.S. comparable sales inched up 1.8% year-over-year. A total of 83 investors tracked by Insider Monkey had a bullish position in McDonald’s Corporation (NYSE:MCD) at the end of the first quarter, down by one from the previous quarter.

Disclosure: none