Why Dreamworks (DWA) and Nvidia (NVDA) Are Among Today’s Surging Stocks

U.S employers hired more people in October than in any other month this year, pushing the unemployment rate down to 5% from 5.1%. However, this freshly-revealed news does not stand behind the surge of the four stocks that we will be discussing in this article. Let’s see what has instead propelled investors to become so excited about the stocks contained within.

Let’s kick off our discussion with Shake Shack Inc. (NYSE:SHAK), which saw its shares advance by more than 4% in pre-market trading. However, some of those gains have faded away after the opening bell, with the stock currently up by nearly 2% thus far in today’s trading session. The burger chain’s stronger-than-expected earnings and revenue stand behind today’s move. Shake Shack Inc. (NYSE:SHAK) reported total revenue of $53.3 million for the quarter, up by 67.4% year-over-year. Its earnings per share came to $0.12, compared with EPS of $0.03 reported a year ago. The analysts polled by Thomson Reuters had anticipated earnings per share of $0.07 on revenue of $47 million. Shake Shack also raised its full-year revenue guidance to $189 million-to-$190 million from $171 million-to-$174 million.

The shares of Shake Shack are 10% in the green year-to-date, despite losing more than 45% since mid-May. Eight hedge funds monitored by our team owned the stock at the end of the second quarter, compared to six reported in the prior one. Similarly, the value of their investments increased to $18.63 million from $8.19 million quarter-over-quarter. Israel Englander’s Millennium Management acquired a 53,102-share stake in Shake Shack Inc. (NYSE:SHAK) during the June quarter.

At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 102% and beating the market by more than 53 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise (while avoiding their high fees at the same time) rather than large-cap stocks.

Moving on to Dreamworks Animation Skg Inc. (NASDAQ:DWA), the Glendale-based animation studio also delivered stronger-than-expected financial results for the third quarter. As a result, the stock is up by more than 15% thus far in today’s trading session. Dreamworks reported third quarter revenue of $259.2 million, which was up by 43.3% year-over-year. Its latest animated movie “Home”, which was released domestically at the end of March, played a crucial role in the strong performance delivered by the company. Dreamworks Animation Skg Inc. (NASDAQ:DWA) reported a net loss of $3.5 million or $0.04 per share, mainly owing to restructuring charges. Excluding those restructuring charges, the company’s net income added up to $1.4 million or $0.02 per share. In the meantime, analysts had anticipated a net loss per share of $0.13 or adjusted net loss per share of $0.05.

The stock lost some of its charm among the hedge funds tracked by our team during the second quarter, with the number of top asset managers invested in the company decreasing to eight from 13. These investors amassed 34% of the company’s outstanding common stock on June 30 however. Mason Hawkins’ Southeastern Asset Management owned 16.45 million shares of Dreamworks Animation Skg Inc. (NASDAQ:DWA) at the end of June.

The next page of the article discusses two other strong performers in today’s trading session. 

Let’s now focus our attention on Skyworks Solutions Inc. (NASDAQ:SWKS), whose shares are up by nearly 6% so far today. Apple Inc. (NASDAQ:AAPL)’s chip supplier posted its financial results for the fourth quarter and full 2015 fiscal year that ended October 2, 2015 today. Skyworks reported non-GAAP diluted earnings per share of $1.52, which beat its guidance of $1.51 per share, and marked a 36% increase year-over-year. Skyworks Solutions Inc. (NASDAQ:SWKS)’s top-line reached $880.8 million for the quarter, which was up by 23% year-over-year and surpassed the company’s guidance of $875 million. According to Thomson Reuters, analysts had expected earnings per share of $1.52 on revenue of $878 million. 36 hedge funds within our database held positions in the company at the end of the June quarter, accumulating 4.10% of its outstanding shares. Louis Navellier’s Navellier & Associates reported owning approximately 327,000 shares of Skyworks Solutions Inc. (NASDAQ:SWKS) during the current round of 13F filings

Last but not least, NVIDIA Corporation (NASDAQ:NVDA) has seen its stock skyrocket by over 14% so far today thanks to its strong third quarter financial results. The visual computing company reported a record quarterly top-line of nearly $1.31 billion, which was up by 7% year-over-year and by 13% quarter-over-quarter. Its GAAP earnings per diluted share came to $0.44, compared to $0.31 reported in the same quarter a year ago. NVIDIA Corporation (NASDAQ:NVDA) also announced a quarterly cash dividend of $0.115 per share, which compares to the previously-paid dividend of $0.0975 per share. Let’s not forget to mention that the shares of the company have advanced by more than 58% since the beginning of the year, so one should closely consider the company’s relatively rich valuation if intending to make an investment in the stock. The number of hedge funds with positions in the company dropped to 30 from 34 during the second quarter, while the value of these positions declined to $422.12 million from $569.88 million quarter-over-quarter. Cliff Asness’ AQR Capital Management reported ownership of 4.02 million NVIDIA Corporation (NASDAQ:NVDA) shares as of June 30.

Disclosure: None