Here’s Why These Five Stocks Are in the Spotlight

M&A activity continues to be robust, after several major companies announced their intentions to tie the knot today, which has helped push the markets into the green this morning despite sliding oil prices.

In this article, we’ll be taking a closer look at five stocks that are in the spotlight, which are Arista Networks Inc (NYSE:ANET), Lumentum Holdings Inc (NASDAQ:LITE), Macy’s Inc (NYSE:M), Whiting Petroleum Corp (NYSE:WLL), and Oasis Petroleum Inc. (NYSE:OAS). Using the latest 13F data, we’ll also analyze hedge fund sentiment towards each of the five equities.

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Traders are watching Arista Networks Inc (NYSE:ANET) after Alex Henderson of Needham reiterated his ‘Buy’ rating on the stock and hiked his price target on it to $110 from $105. The analyst thinks that the fast-paced growth in Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT)’s cloud infrastructure divisions is “strongly suggestive” that demand for Arista’s products will be strong. Henderson’s target price would represent a gain of nearly 30%. Of the 749 hedge funds that we track which filed 13Fs for the June quarter, 17 funds owned $268.65 million in Arista Networks Inc (NYSE:ANET) shares on June 30, down from 26 funds with Arista positions valued at $242.5 million on March 31.

Although its stock is down today by around 4%, likely due to the continued fallout from last week’s rather soft earnings report, Lumentum Holdings Inc (NASDAQ:LITE) also received a vote of confidence from Needham, as the firm raised its price target on the stock to $56 from $50 and maintained its ‘Strong Buy’ rating. Analyst Alex Henderson raised his target for valuation reasons and designates the stock as his ‘Single Best Idea’ in the optical sector. The number of funds in our system with holdings in Lumentum Holdings Inc (NASDAQ:LITE) fell by eight quarter-over-quarter to 25 at the end of June.

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On the next page we’ll find out why Whiting Petroleum and Oasis Petroleum are lower today, while Macy’s is in the green.

Oasis Petroleum Inc. (NYSE:OAS) and Whiting Petroleum Corp (NYSE:WLL) are off by 7.4% and 5% respectively due to lower WTI prices. On account of OPEC’s inability to decide which country will cut by what amount in recent days, the price of the front-month WTI futures contract has fallen sharply, by around 2.6% to $47.40 per barrel from the previous $50 per barrel level. Lower oil prices mean less un-hedged revenue for both producers. It also means less opportunities to hedge future production at attractive prices. In addition, the merger between General Electric Company (NYSE:GE)’s oil and gas unit and Baker Hughes Incorporated (NYSE:BHI) might not be a positive, as more consolidation in the energy space could lead to higher service prices, which would potentially trim margins.

With that said, while the picture looks bleak for an OPEC agreement at the moment, the cartel will meet again in November to try and work out a deal. Bulls hope that the cartel can put aside its differences by that time. 41 funds in our database were long Whiting Petroleum Corp (NYSE:WLL) at the end of June, while 33 were long Oasis Petroleum Inc. (NYSE:OAS).

Macy’s Inc (NYSE:M) shares are 2.1% in the green after Deutsche Bank upgraded the stock to ‘Buy’ from ‘Hold’ and raised its price target on it to $45 from the previous $40 per-share mark. Analyst Paul Trussell thinks that the retailer’s margins could be better-than-expected and that the company could soon gain earnings momentum. In addition, Trussell likes Macy’s valuation, which looks cheap to him. Shares of Macy’s are up by around 5% year-to-date, but are down by 50% since the middle of July 2015. 57 funds tracked by Insider Monkey owned $1.14 billion worth of Macy’s Inc (NYSE:M) stock at the end of June, which accounted for 11.00% of the float.

Disclosure: None