Why Are These Five Stocks on Investors’ Radars Today?

Markets are struggling to find a direction on Monday amid the Institute for Supply Management data that showed that its index of national factory activity amounted to 52.6 in June, missing the consensus of 53.2, but still represents an expansion in manufacturing.

Among the important stocks that are worth watching today are Alphabet Inc (NASDAQ:GOOGL), GlaxoSmithKline plc (ADR) (NYSE:GSK), Harman International Industries Inc. /DE/(NYSE:HAR), Transocean LTD (NYSE:RIG), and Vulcan Materials Company (NYSE:VMC). Let’s take a closer look at the companies in question and see what the smart money investors from our database think about them.

The smart money sentiment is an important metric that can be used to assess the long-term profitability of a stock. While there are thousands of stocks trading daily on the market, taking a look at what hedge funds think about certain companies can narrow down the search significantly. At Insider Monkey, we track more than 770 hedge funds, whose 13F filings we analyze as part of our small-cap strategy. Our research has shown that imitating a portfolio that includes the 15 most popular small-cap stocks among hedge funds can outperform the market by as much as 95 basis points per month on average (see more details here).

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Alphabet, GlaxoSmithKline to Start a Bioelectronic Company

Alphabet Inc (NASDAQ:GOOGL) and British pharmaceutical giant GlaxoSmithKline plc (ADR) (NYSE:GSK) are in the spotlight today after the companies announced plans to create a new company, Galvani Bioelectronics that will be engaged in development of bioelectronic medicines. The new company will be headquartered in the UK, and 45% of it will be owned by Alphabet’s Verily Life Sciences division. Alphabet and GlaxoSmithKline will pump a funding of $715 million over seven years to Galvani Bioelectronics, under the terms of the agreement. The joint venture will be focused on the development of small, implantable devices to modulate and intervene in the nerve signals. President of Galvani, Kris Famm, said in an interview to Reuters that medicines using miniaturized implants could be submitted for regulatory approval by 2023. A total of 155 investors tracked by Insider Monkey held stakes in Alphabet Inc (NASDAQ:GOOGL)’s class A stock at the end of the first quarter and 28 funds were long GlaxoSmithKline plc (ADR) (NYSE:GSK).

Harman International’s Future Prospects are Strong

Investors are watching Harman International Industries Inc. /DE/(NYSE:HAR) following a Barron’s article that analyzed the growth prospects of the company that makes connected products and infotainment systems for cars. The source cited Deutsche Bank’s analyst Patrick Nolan, who thinks that infotainment systems in cars are expected to rise by 80% in the next five years. Harman is well-positioned to take advantage of this trend as it has an edge amid its recent acquisitions in the fields of cybersecurity and wireless software delivery.  Mr. Nolan also predicts that Harman’s Connected Car division will grow by 7% a year through the end of the decade. The source also mentioned a survey done by McKinsey & Company, according to which 37% drivers are willing to change their cars for better infotainment systems, up from 20% in 2014. A total of 23 funds from our database were bullish on Harman International Industries Inc. /DE/(NYSE:HAR) at the end of March.

On the next page, we discuss Transocean and Vulcan Materials. 

Transocean Acquires Transocean Partners

Transocean LTD (NYSE:RIG) is in the spotlight after the company said on Monday that it had agreed to acquire all of the outstanding common units of Transocean Partners LLC in a share-for-unit merger transaction. According to the deal, Transocean Partners common unitholders will receive 1.1427 Transocean shares for each Transocean Partners common unit. Transocean expects to issue approximately 22.7 million shares in the merger. The deal is expected to close in the fourth quarter of 2016. Transocean will also acquire 51% of ownership interests in Discoverer Inspiration, Discoverer Clear Leader and Development Driller III, currently owned by Transocean Partners. Joshua Packwood and Schuster Tanger’s Radix Partners was one of 39 hedge funds from our database that were bullish on Transocean LTD (NYSE:RIG) heading into the second quarter.

Vulcan Materials Misses Estimates

Vulcan Materials Company (NYSE:VMC)’s stock has slid by more than 4% so far today after the company reported second-quarter earnings that missed analysts’ forecasts. The Alabama-based construction materials company posted EPS $0.90, versus estimates of $1.00, while revenue in the quarter came in at $957 million, worse than the expected $1.01 billion. The performance in the quarter was badly affected due to soft volumes amid extremely wet weather, as well as slower-than-expected start to large projects. Among the funds tracked by us, 41 investors were positioned in Vulcan Materials Company (NYSE:VMC) at the end of March.

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