Editors' Pick: Originally published Feb. 3.
The 25 stocks most widely held by hedge funds and other large-cap institutional funds largely performed in-line with the S&P 500 Index in January, which gave us a terrible start to 2016.
Below is a list of how the top-10 most-held stocks did in the month.
Widely held stocks specifically within the utilities, telecom services, household and personal products, food beverage and tobacco and large-cap food and staples industries outperformed in January. Meanwhile widely held stocks in the pharmaceuticals and biotech, autos and components, large-cap banks, small-cap energy and diversified financials, lagged, according to a report out this week by Credit Suisse.
The S&P 500 Index sunk 5.1% in January, as the markets teetered from extreme intraday volatility in the global markets as a result of plunging oil prices, growth concerns in China, new concerns over the Federal Reserve's timeline for further interest rate hikes, among other things.
Here are the one-month performances of the top 10 stocks held by large cap funds. We've paired the list with commentary from Jim Cramer, if the stock is owned by his Action Alerts PLUS Charitable Trust Portfolio.
Credit Suisse Rating/Target Price: Outperform/$85
Visa reported better-than-expected December-quarter results on Jan. 28. The company said its fiscal-first quarter earnings rose 24% year over year as consumer spending rose via credit and debit cards.
Spending on Visa cards rose 11.5% over the first quarter of 2015 to $1.3 trillion.
That said, the strong U.S. dollar remains a headwind for Visa. Payment volume rose less than 5% when considering the dollar's fluctuations, the Associated Press wrote.
Credit Suisse Rating/Target Price: Underperform/$22
Cisco reports its fiscal-second quarter results on Feb. 10. Analysts are expecting the San Jose, Calif.-based company to post a profit of 54 cents a share, up 2% from last year's quarter. Revenue is expected to fall 1% to $11.75 billion, according to Thomson Reuters.
Cisco made headlines last week after Arista Networks filed a lawsuit over patent and copyright infringement. "Arista claims Cisco suddenly laid claim to technology as its own that had long been regarded as generally belonging to the entire industry," according to Barron's.
"We believe Cisco should be able to weather the current macro storm, and see potential for shares to be re-rated higher if investors rotate out of 'growth tech' investments toward more stable 'value tech' names," wrote Cramer and Jack Mohr, research director of Action Alerts PLUS, in their most recent weekly roundup. "Cisco falls within this category and then some, as it provides a nice mix of stable growth, income (3.6% yield) and value, with shares trading just above 10x 2016 EPS estimates."
"The story is not without risk, but we see true value long term and maintain our $30 target," they wrote.
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Credit Suisse Rating/Target Price: Neutral/$108
Johnson & Johnson reported better-than-expected fourth quarter adjusted earnings per share of $1.44, two cents higher than Wall Street estimates, even though sales of $17.8 billion, were down 2.4% from last year's quarter and missed estimates. Still investors rewarded Johnson & Johnson following the quarter's results.
Most notably, the company forecasted full-year EPS that were higher than investors were expecting. As well, two of the company's big sellers -- diabetes drug, Invokana, and its blood cancer drug, Imbruvica, each had solid growth, despite fears of sales slowdowns.
TheStreet's Jim Cramer weighed in on Johnson & Johnson's earnings last week.
"I have been waiting for [CEO] Alex Gorsky to get Johnson & Johnson to accelerate its lagging medical device business and in one fell swoop he did just that, bucking the entire anti-health-care move," Cramer wrote. "The stock's gone up but it can go higher given the outstanding growth that division's showing even as I feel terribly for the 3,000 people who had to be let go to restructure that division. JNJ's back and its doing fabulously."
Credit Suisse Rating/Target Price: Outperform/$62
Wells Fargo reported in-line fourth quarter earnings. Yet CFO John Shrewsberry noted that strength in consumer banking could offset any weakness this year in trading, investment-banking and corporate-lending businesses.
Wells Fargo "benefits from a talented management team, diversified business mix, and a retail deposit base that helps drive the highest net interest margin among its U.S. large-cap peers," wrote Cramer and Jack Mohr, research director of Action Alerts PLUS, in their most recent weekly roundup. "We expect its cross-selling transaction initiatives to continue as it drives further revenue, expands capabilities and continues to capture expense synergies from its Wachovia acquisition. Our target remains $63."
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Credit Suisse Rating/Target Price: Outperform/$120
CVS will report fourth-quarter earnings results on Feb. 9. Analysts expect the company to post earnings per share of $1.53 for the three-month period, up 27% from the year-earlier quarter. Revenue is expected to increase by 11% to $41.1 million.
Credit Suisse Rating/Target Price: Outperform/$75
JPMorgan Chase recently reported fourth-quarter profit of $5.4 billion, up 10% from last year's quarter, aided by lower expenses. Earnings per share of $1.32 beat Wall Street expectations by seven cents a share. Revenue inched 1% higher from the prior year's quarter.
"The businesses generated strong loan growth and credit quality, except for some stress in energy," JPMorgan's CEO Jamie Dimon said in a statement.
Credit Suisse Rating/Target Price: Outperform/$125
Gilead posted fourth-quarter adjusted earnings and revenue above analysts' estimates, but forecast for 2016 revenue below expectations.
The Foster City, Calif.-based biotech company faces growing competition within the Hepatitis C space as Merck develops a less-expensive option.
Credit Suisse Rating/Target Price: Outperform/$900
For the fourth quarter, Alphabet earned an adjusted $8.67 a share on $21.33 billion in sales, including traffic acquisition costs. Excluding these costs, Alphabet generated $17.27 billion in sales. Analysts surveyed by Thomson Reuters expected the company to earn $8.10 a share on $20.78 billion in sales, including traffic acquisition costs.
"GOOGL's third consecutive quarter of accelerating revenue growth -- well beyond what even the most bullish analysts had forecasted -- was driven in large part by the continued, pronounced shift to mobile, an increasingly relevant theme that has proven elusive for the vast majority of its internet and media cohorts, with Facebook being the exception," according to Jack Mohr, research director for Action Alerts PLUS. "Google's focus on its core mobile search business has led to improved monetization, greater consumer adoption, and a virtuous cycle of reaccelerating growth for the future."
Mohr continued: "Alphabet's management -- headlined by CFO Ruth Porat (former Wall Street heavy-hitter who has emerged as one of Silicon Valley's biggest C-Suite stars) -- appears in the early innings of not merely building upon past success, but creating new layers of innovation powered by its deeply embedded mobile, digital and social ecosystem. Alphabet -- and Facebook for that matter -- appear to be five chess moves ahead of the competition."
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Credit Suisse Rating/Target Price: Outperform/$62.50
Last week, the Redmond, Wash.-based company posted declining profit and revenue for its most recent quarter, but cloud computing is a bright spot for the software giant. Microsoft's software businesses are suffering as the personal computer business declines, even with its relaunched Microsoft 10 operating system. On the other hand its cloud business is growing.
Credit Suisse Rating/Target Price: Outperform/$140
Apple investors are concerned about the slowing growth of iPhone sales at the tech giant.
Last week, the Cupertino, Calif.-based company reported first quarter iPhone sales of 74.8 million, just below the Wall Street estimate of around 75 million and up just 0.2% year over year. Apple's earnings per share of $3.28 slightly beat analysts' estimates by 2 cents a share, but revenue of $75.9 billion fell slightly short of expectations.
"The incremental drag on shares following the report, in our view, was Apple's commentary on weak global economic conditions, with management pointing out unexpected weakness in the U.S. and Japan as well as the deterioration in China," wrote Cramer and Jack Mohr, research director of Action Alerts PLUS, in their most recent weekly roundup. "While bears will rally around the implied 10%-20% year-over-year unit decline in fiscal 2Q iPhone units, we would first note that a major driver for this decline is the extremely difficult year-over-year comparison against same-quarter unit sales last year, which management explained was inflated by pent-up demand that spilled over into the quarter (from 1Q to 2Q fiscal 2015). We think this factor, combined with strong average selling price (ASPs), market share momentum and resilient gross margins suggest that Apple's iPhone franchise can recover in the back half of the year, thereby restoring faith in the validity of the long-term story."
"We believe the suggestion that the company's growth days are over is narrow-minded at best and ignorant at worst," they added. "As a result of the re-rating and global weakness, however, we did decrease our price target to $140."
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