Why Are These Five Stocks in the Spotlight Today?

The major US indices inched down on Friday, with the Dow Jones Industrial Average and the S&P 500 losing around 0.50% in the first hour of trading. Meanwhile, shares of Apple Inc. (NASDAQ:AAPL), BHP Billiton Limited (ADR) (NYSE:BHP), Kroger Co (NYSE:KR), Under Armour Inc (NYSE:UA), and Fitbit Inc (NYSE:FIT) are trending for various reasons. Therefore, in this article we are going to take a closer look at the latest developments surrounding these stocks.

In addition, let’s analyze the hedge fund sentiment toward these stocks. In the eyes of most traders, hedge funds are assumed to be underperforming, old investment tools of the past. While there are more than 8000 funds in operation at present, Hedge fund experts at Insider Monkey look at the aristocrats of this group, around 730 funds. Contrary to popular belief Insider Monkey’s research revealed that hedge funds underperformed in recent years because of their short positions as well as the huge fees that they charge. Hedge funds managed to outperform the market on the long side of their portfolio. In fact, the 15 most popular small-cap stocks among hedge funds returned 102% since the end of August 2012 and beat the S&P 500 Index by 53 percentage points (see the details here).

Apple Inc. (NASDAQ:AAPL) shares are trending after the company announced that it will team up with China UnionPay to make Apple Pay available to people in China as soon as the first half of 2016. Under the plan, China UnionPay cardholders can add their bank cards to Apple Pay on Apple iPhones and other devices and use Apple Pay much in the same way as Americans do. Although Apple Pay isn’t a big EPS driver for the company, it is an important part of Apple’s ecosystem and will ensure more people stick with their iPhones (rather than buying an Android or Windows Phone). Given the predictions that Apple’s iPhone sales will fall for the first time ever next year, Apple could use any help it can get. Moreover, Apple Inc. (NASDAQ: AAPL) also recently has promoted Jeff Williams to the COO position, a move that some think will lead to Williams becoming CEO one day.

BHP Billiton Limited (ADR) (NYSE:BHP) recieved some more bad news today, as Moody’s put the commodity giant’s credit rating into its ‘review for downgrade’ category. According to a statement, Moody’s is considering a downgrade because the ratings agency expects the soft commodity prices to “persist for the next several years, significantly reducing BHP Billiton’s earnings and cash flow generation.”

“As a result, we expect BHP Billiton’s credit metrics to deteriorate beyond our expectations for the current rating, absent further countermeasures.”

Investors seem to have priced in the news, however, as shares of BHP Billiton Limited (ADR) (NYSE:BHP) are trading 1.48% higher. According to our data, hedge fund sentiment in BHP Billiton has been stable, with 20 funds long the stock at the end of September, up by one from the end of June.

On the next page, we are going to examine Kroger, Under Armour, and Fitbiy.

Kroger Co (NYSE:KR) is trending today after the analysts at Wells Fargo initiated an ‘Outperform’ rating on the stock. Although it is down by 1.5% today, the company’s stock has surged by over 30% year-to-date on the back of its strong private label program as well as higher same store sales. Given its deep consumer insights through loyalty cards, Kroger is also realizing record levels of efficiency. Among the funds we track, 42 investors reported long positions in Kroger as of the end of the third quarter, up from 33 funds a quarter earlier. At the end of September, the funds we track amassed 3.60% of the company’s outstanding stock.

The analysts at Mizuho are certainly a little more optimistic on Friday, as they initiated coverage with ‘Buy’ ratings on both Fitbit Inc (NYSE:FIT) and Under Armour Inc (NYSE:UA) with price targets of $38 and $95, respectively. Mizuho likes both companies’ strong EPS growth prospects, which are expected to be 32% a year for Fitbit and 23% for Under Armour for the next five years. The analysts also like Under Armour’s increasing level of brand awareness. Shares of Fitbit Inc (NYSE:FIT) are off by 0.5% and Under Armour Inc (NYSE:UA) is up 1.57% on the back of the upgrades. According to our data, a total of 23 funds were long Under Armour and 20 funds owned shares of Fitbit at the end of September.

Disclosure: none