Hedge Funds Are Buying 5 Buy Rated Stocks From Argus
One great source for bullish stock ideas come from analyst ratings. When analysts write a report on a company, and if the analyst is reputable, it can have a big effect on the stock price. [More lists: 4 Stocks with Short Covering, Insider & Hedge Fund Buying]
With this in mind we ran a screen for stocks with current "Buy" ratings from Argus Research Company, an independent equity research firm (i.e. analysts at Argus expect these stocks to outperform).
Building the List
We started with a list of buy rated stocks from Argus Research Company. All stocks have had their rating renewed within the year.
Why? Analysts typically focus on a specific industry and produce regular reports containing predictions on commodity prices and expected performance for a stock. But be warned, every report produced by a sell-side analyst is called a “blanket recommendation” because they do not take into account the wants and needs of every individual. Investors must therefore determine if they are applicable to their own portfolio.
Interactive chart: Compare AVERAGE analyst rating for the stocks listed below. Press play to see how these ratings have changed over the past two years. Click through to access more free tools and data.
From there we screened for those with bullish sentiment from institutional investors, with significant net institutional purchases over the last quarter representing at least 5% of share float.
Why? This indicates that institutional investors (banks, insurance companies, hedge funds, etc.) expect these names to outperform into the future. Their market power is considerable, not least because when they move large quantities of cash into and out of stocks it influences decisions made by other investors.
Main Street investors often try to mimic these large intuitional traders knowing that a professional with access to sophisticated market analysis would not sink several millions into a stock without some due diligence.
Combining buy ratings and institutional buying we were left with 5 stocks. Do you think these names are solid stock picks? Use this as a starting point for your own analysis.
1. American International Group, Inc. (AIG): The company operates property and casualty insurance networks worldwide and conducts activities in the U.S. life insurance and retirement services industry. Market cap at $55.8B, most recent closing price at $37.80.
On 12/05/2012, Argus had a Buy rating on the stock.
Net institutional purchases in the current quarter at 222.5M shares, which represents about 17.94% of the company's float of 1.24B shares.
2. Cracker Barrel Old Country Store, Inc. (CBRL): Engages in the operation and development of the Cracker Barrel Old Country Store restaurant and retail concept in the United States. Market cap at $1.89B, most recent closing price at $79.36.
On 05/25/2012, Argus had a Buy rating on the stock.
Net institutional purchases in the current quarter at 1.3M shares, which represents about 7.% of the company's float of 18.57M shares.
3. Kohlberg Kravis Roberts & Co. (KKR): A private equity and venture capital firm specializing in acquisitions, leveraged buyouts, management buyouts, and mezzanine investments in large cap companies. Market cap at $3.96B, most recent closing price at $18.94.
On 06/12/2012, Argus had a Buy rating on the stock.
Net institutional purchases in the current quarter at 17.5M shares, which represents about 7.45% of the company's float of 234.79M shares.
4. Transocean Ltd. (RIG): Provides offshore contract drilling services for oil and gas wells worldwide. Market cap at $16.53B, most recent closing price at $51.80.
On 11/08/2012, Argus had a Buy rating on the stock.
Net institutional purchases in the current quarter at 24.3M shares, which represents about 7.49% of the company's float of 324.63M shares.
5. Zimmer Holdings, Inc. (ZMH): Engages in the design, development, manufacture, and marketing of orthopaedic reconstructive implants, spinal and trauma devices, dental implants, and related surgical products. Market cap at $12.26B, most recent closing price at $72.38.
On 02/13/2013, Argus had a Buy rating on the stock.