NEW YORK (TheStreet) -- Health care stocks continued to be the most popular sector for hedge funds to plow their money into last quarter.

Hedge funds made an aggregate purchase of $7.15 billion in the sector for the three-month period through June 30, following nearly $5 billion in aggregate health care-sector purchases in the first quarter, according to S&P Capital IQ's, a division of McGraw Hill Financial (MHFI) , quarterly hedge fund tracker. The report analyzed Securities and Exchange Commission 13-F filings by the 10 largest hedge funds by asset size to spotlight big buying and selling trends.

Following health care stocks, hedge fund managers put $2.36 billion investing dollars into consumer discretionary stocks, followed by $856 million in consumer staples. In comparison, hedge fund managers continued to sell out of information technology stocks, with $3.12 billion in net sells last quarter, followed by industrials, S&P Capital IQ found.

Check out the five stocks with the biggest investment by hedge fund managers. TheStreet highlights notable new or added positions on each of the five stocks, pairing the companies with ratings from TheStreet Ratings. 

TheStreet Ratings, TheStreet's proprietary ratings tool, projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

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AMZN

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5. Amazon.com Inc. (AMZN) - Get Report
Market Cap: $233 billion
Year-to-date return: 66.2%
Who Bought?: Viking Global Investors, Tiger Global Management

Viking and Tiger Global each took new positions in the online retailer, purchasing 2.28 million shares and 747,000 shares, respectively. Viking's total stake is worth $1.18 billion, while Tiger Global's purchase was worth $385.3 million, according to Bloomberg.

TheStreet Ratings: Hold, C
TheStreet Ratings said:
"We rate AMAZON.COM INC (AMZN) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 173.0% when compared to the same quarter one year prior, rising from -$126.00 million to $92.00 million.
  • AMZN's revenue growth trails the industry average of 33.2%. Since the same quarter one year prior, revenues rose by 19.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 41.10% is the gross profit margin for AMAZON.COM INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 0.39% trails the industry average.
  • AMAZON.COM INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AMAZON.COM INC swung to a loss, reporting -$0.54 versus $0.58 in the prior year. This year, the market expects an improvement in earnings ($1.63 versus -$0.54).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet & Catalog Retail industry and the overall market, AMAZON.COM INC's return on equity significantly trails that of both the industry average and the S&P 500.
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NFLX

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4. Netflix Inc. (NFLX) - Get Report
Market Cap: $44.5 billion
Year-to-date return: 130.5%
Who Bought?: Tiger Global Management

Tiger Global increased its position by 16.9 million shares last quarter. Its entire stake in the streaming media stock (roughly 4.2% of shares) is worth $2.02 billion, according to Bloomberg.

TheStreet Ratings: Hold, C+
TheStreet Ratings said:
"We rate NETFLIX INC (NFLX) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • NFLX's revenue growth trails the industry average of 33.2%. Since the same quarter one year prior, revenues rose by 22.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for NETFLIX INC is currently very high, coming in at 84.02%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.60% trails the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Internet & Catalog Retail industry and the overall market, NETFLIX INC's return on equity is below that of both the industry average and the S&P 500.
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VRX

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3. Valeant Pharmaceuticals International Inc. (VRX)
Market Cap: $75.3 billion
Year-to-date return: 60%
Who Bought?: Paulson & Co., Viking Global Investors

Paulson & Co. increased its position with 6.95 million shares and currently has a 2.6% stake in Valeant worth $2.06 billion, according to Bloomberg. Viking Global Investors also bought 558,000 shares. Its stake is worth just over $1 billion.

TheStreet Ratings: Buy, B-
TheStreet Ratings said:
"We rate VALEANT PHARMACEUTICALS INTL (VRX) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, expanding profit margins, solid stock price performance and notable return on equity. We feel its strengths outweigh the fact that the company has had sub-par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 33.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has slightly increased to $410.50 million or 9.17% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -13.48%.
  • The gross profit margin for VALEANT PHARMACEUTICALS INTL is currently very high, coming in at 78.66%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -1.93% is in-line with the industry average.
  • Compared to its closing price of one year ago, VRX's share price has jumped by 125.49%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • VALEANT PHARMACEUTICALS INTL has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VALEANT PHARMACEUTICALS INTL turned its bottom line around by earning $2.67 versus -$2.62 in the prior year. This year, the market expects an improvement in earnings ($11.64 versus $2.67).
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JD

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2. JD.com (ADR) (JD) - Get Report
Market Cap: $34.7 billion
Year-to-date return: 7.6%
Who Bought?: Tiger Global Management, Lone Pine Capital

Tiger Global increased its position significantly with 49.2 million shares last quarter. The stake, 6.4% of JD.com shares, is worth $1.75 billion as of Thursday. Lone Pine also bought 3.36 million shares. Lone Pine's entire 3.4% stake in JD.com was worth $1.04 billion.

TheStreet Ratings: Hold, C-
TheStreet Ratings said:
"We rate JD.COM INC -ADR (JD) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • JD's very impressive revenue growth exceeded the industry average of 33.2%. Since the same quarter one year prior, revenues leaped by 62.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • JD has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign.
  • JD has underperformed the S&P 500 Index, declining 11.23% from its price level of one year ago.
  • Compared to other companies in the Internet & Catalog Retail industry and the overall market, JD.COM INC -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for JD.COM INC -ADR is currently extremely low, coming in at 6.48%. Regardless of JD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.93% trails the industry average.
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BAX

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1. Baxter International Inc. (BAX) - Get Report
Market Cap: $21 billion
Return as of July 1 (stock split): 1.9%
Who Bought?: Third Point LLC

Third Point is the top shareholder of Baxter International, holding 9.6% of the company's shares worth $2.08 billion. In the second quarter it added 48.5 million shares.

TheStreet Ratings: Buy, A-
TheStreet Ratings said:
"We rate BAXTER INTERNATIONAL INC (BAX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, attractive valuation levels, expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, BAX's share price has jumped by 253.72%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BAX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The gross profit margin for BAXTER INTERNATIONAL INC is rather high; currently it is at 55.90%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 8.52% is above that of the industry average.
  • Net operating cash flow has increased to $696.00 million or 16.19% when compared to the same quarter last year. Despite an increase in cash flow, BAXTER INTERNATIONAL INC's average is still marginally south of the industry average growth rate of 21.81%.
  • Despite the current debt-to-equity ratio of 1.78, it is still below the industry average, suggesting that this level of debt is acceptable within the Health Care Equipment & Supplies industry. Despite the fact that BAX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.51 is high and demonstrates strong liquidity.