Barron’ Weekend Summary: Barron’s Roundtable panelists say that speculation is rampant, and that with stock prices high, good news is already baked into many shares.
* Cover story: The panelists on Barron’s Roundtable, who met on January to discuss prospects for investors and the economy, say stock prices are now sky-high, speculation is rampant, and the good news is firmly baked into many shares, such that 2021 is set to an unexciting year for equities; William Priest of Epoch Investment Partners likes TMUS, AMGN, NEP, NKE, ANET, and DIS; Meryl Witmer of Eagle Capital Partners likes VTRS, HMHC, and Lafarge-Holcim.
* Tech Trader: “The last several years—and the last few weeks in particular—have revealed significant issues wrought by social media,” says columnist Eric Savitz. “But repealing Section 230 isn’t the solution. In fact, it could make things worse.”
* Trader: Cautious on MMM: With the company set to report earnings later this month, several analysts think the shares have more upside, though potential problems could arise from its exposure to legislation regarding water contamination from per- and polyfluoroalkyl substances, or PFAS; Those who doubt that trading has moved away from high-growth tech to economically sensitive stocks should look at what the FAANGs plus MSFT have done since the end of August—they’ve dropped an average of five percent, even as the S&P 500 has gained eight percent.
* Follow-Up: Cautious on GME: Shares rose on news CHWY co-founder Ryan Cohen would join the board, but the surge is likely to be temporary, and the trend of downloading videogames instead of buying hard copies in stores is likely to continue to cause pain; Cautious on INTC: Incoming chief Pat Gelsinger, who takes over on February 15, faces challenges, but his appointment is a step in the right direction, and his technical expertise is a clear contrast to the financial background Bob Swan brought to the job.
* Features: 1) Experts discuss how to improve the rollout of the coronavirus vaccine, including simplifying the process, targeting hard-to-reach groups, an increase in federal spending to help the effort, having groups such as the National Guard help vaccinate people, and creating a new Operation Warp Speed; 2) Positive on TOL: As the nation’s largest luxury-home builder, the company is ideally positioned to take advantage of a growing shift toward bigger, more expensive single-family housing, and its stock, in contrast to its inventory, is inexpensive; 3) Positive on BEAM, BMRN, QURE: Gene editing is advancing so quickly that next-generation technologies are already on the heels of Crispr-Cas9, including a more-precise tool called base editing, and while startups will lose money during clinical trials, many are acquisition targets for Big Pharma.
* European Trader: Positive on WPP: The world’s largest advertising agency is a bellwether for the economic health of different sectors, and shares have been depressed, but its expansion to help clients build e-commerce platforms was prudent, a more integrated approach is resonating with customers, and as the shares recover many analysts see more upside.
* Emerging Markets: In Brazil, generally not a country the inspires optimism, liberal spending to offset rampaging Covid-19 led to a gaping budget deficit last year, and national debt nudging 100 percent of GDP, yet investors are remarkably upbeat, and “The No. 5 emerging market offers a rare bargain basement in a world of vertiginous valuations.”
* Commodities: “Increased global demand, together with recent supply cuts, could spark a more than 20 percent rally in oil prices this year, experts say”—traders wanting to profit from the potential rally should consider buying June-dated futures contracts for light sweet crude on the CME purchasing DBO, which holds a basket of crude oil futures.
* Streetwise: Jeremy Grantham recently wrote that the US stock market is a “real humdinger” of a bubble that will pop by late spring or summer at the latest, and though critics say he calls too many bubbles, the S&P 500 does look pricey, says columnist Jack Hough.