Markets

Top New Buys: Funds Pile Into Actavis, chip stocks

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After a three-month-long correction, the Nasdaq composite index followed through on March 27. That means it's time to look for stocks breaking out of sound bases.

But mutual funds have already been busy in recent months, their buying helping to form the right side of the stock basing patterns.

The top-performing funds of the past three months have been big buyers in their latest reporting periods of chipmakers such asAvago Technologies ( AVGO ),Skyworks Solutions ( SWKS ) andCavium ( CAVM ).

Top-performing sectors recently have been defensive areas, including auto-related issuesLydall ( LDL ),Meritor ( MTOR ) andGoodyear Tire & Rubber (GT).

Managers of leading funds have continued to add to their transportation holdingsSouthwest Airlines (LUV),Alaska Air Group (ALK) andSpirit Airlines (SAVE).

In other industries, the ubiquitous K-cup coffee giantKeurig Green Mountain (GMCR) has garnered big money from top funds.

IBD found 59 top-notch funds loading up onActavis (ACT), investing an estimated $145 million in their latest reporting periods.

Two A+ rated funds, $36.3 billion Vanguard Health Care Fund and $5.9 billion Fidelity Select Health Care Portfolio Fund, owned big stakes in the firm.

The Ireland-based company makes and distributes generic and branded drugs for hypertension, pain, sleep disorder and contraception. To boost its portfolio of products, especially in their branded-drug area, it made a big purchase earlier this year, buying rival Forest Laboratories in a deal valued at $25 billion.

After reaching a 52-week high of 230.77 on Feb. 26, the stock has been etching the right side of a later-stage base. It's currently sitting just 6% off its high.

Actavis has been growing earnings at a healthy double-digit pace in at least the past five quarters. Revenue growth has also been robust in the 20% range for the same period.

The drug firm's first-quarter earnings shot up 75%. Analysts polled by Thomson Reuters see a 44% rise in profits for the year.

Sell Side

The nation's top funds have been unloading managed-care giantsAetna (AET),WellPoint (WLP) andUnited Healthcare (UNH) in their latest reporting periods.

Earnings growth for each of these three firms has been slowing and inconsistent in the past four quarters.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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