RBC Capital: 3 Hedge Fund Stocks Beating The Market

Are you ready for some ‘Hedge Fund Hot Dogs’?! Following the release of hedge fund trades for the first quarter, RBC Capital is out with a list of the most popular hedge fund stocks right now. It calls these stocks “Hedge Fund Hot Dogs,” i.e. the stocks with the most hedge fund dollars invested in them. This group of stocks has outperformed strongly since 2010 – “a testament to active management” according to RBC Capital’s Lori Calvasina.

Alongside the well-known big guns like Facebook (Nasdaq:FB) (the no.1 top hedge fund stock) there are also a number of newcomers to the Top 20 list. Here we use TipRanks’ big data capabilities to delve into the outlook of three of these new stocks. TipRanks tracks the latest ratings from over 4,700 analysts meaning you can both 1) see the overall analyst consensus rating and 2) find out what the best-performing analysts have to say about a specific stock.

Electronic Arts (Nasdaq:EA)

Welcome to our first newcomer to the hedge fund top stock list. Video games giant EA has joined the list at 17thplace. Hedge funds have $5.53 billion invested in this hot gaming stock- which pops up in 17% of the 340 hedge fund portfolios covered by RBC. If you look at the Street take on EA, this makes sense. In the last three months, 10 analysts have published buy ratings on EA- no hold or sell ratings here. Plus their average price target of $146 indicates 10% upside from current levels.

Interestingly, EA is outperforming despite the huge success of Epic’s Fortnite. Top Jefferies analyst Timothy O’Shea explains why here: “EA is now the third straight US video game publisher to post strong results despite Fortnite being the hottest game in years, suggesting Fortnite is more about expanding the market than cannibalizing it.”

He notes that EPS of $1.28 was well ahead of $1.16 consensus and full year guide of $4.85 seems conservative. At the same time, the “F’19 setup seems very strong with the release slate anchored by FIFA and Battlefield, EA’s two biggest franchises.” Looking much further ahead, O’Shea sees huge potential for EA as “games will become ubiquitous across all platforms and devices, and cloud-based services will increase the addressable market by a factor of four.” In his May 9 report, O’Shea reiterated his $150 price target on EA (13% upside potential). You can click on the graph below for further insights into all the latest market activity on EA:

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Disclaimer: TipRanks is an independent cloud based service that measures and ranks digitally published financial advice. TipRanks' natural language processing (NLP) algorithms aggregate and ...

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