Barrons Saturday summary: Positive on AMAT, LRCX, CNK, BWA, BKS; cautious on for-profit education companies APOL, STRA, CPLA, LOPE, BPI
- Cover story: The best income ideas for 2015 include bonds, dividend stocks, real estate investment trusts, master limited partnerships, preferred stocks, closed-end funds, and business development companies;
- Tech Trader: Positive on AMAT, LRCX: Shares of companies that make the equipment used to manufacture chips have ended a second year of outperformance, and could see large gains in 2016 even if they remain flat this year;
- Trader: The S&P rose 11.4% in 2014 and returned 13.7%, compared to 29.6% and 32.4% respectively in 2013; Positive on CPA: Panama-based airline has good management, stable operating margins, and excellent long-term growth potential, and its recent share price drop more than discounts potential concerns; Big-caps soundly beat small-caps in 2014, a trend that could continue in 2015;
- Features: 1) Positive on CNK: Worlds largest movie theater chain by attendance underperformed the broad market in 2014, but it generates strong cash flow and offers a generous dividend, and a series of upcoming blockbusters could give it a boost; 2) Positive on BWA: Recent selloff offers an opportunity to invest in a company with higher returns and better growth prospects than its peers, and at a valuation well below historic levels;
- Follow-Up: Positive on BKS: Bookstore chain combines a low stock-market valuation with a solid fundamental story that is still underappreciated, and deals with MSFT and PSO could clear the way for it to separate its Nook business from other operations; Negative APOL, STRA, CPLA, LOPE, BPI: For-profit education companies continue to face problems on many fronts, including proving the value of their degrees, and Grand Canyons Michael Clifford says the sector is dead;
- European Trader: Positive on Renault: Shares of French automaker are set to rise as it increasingly benefits from its alliance with Nissan and a new production plan;
- Asian Trader: India investors could face problems if Prime Minister Modis agenda takes longer than planned to implement or is substantially altered, especially given global markets growing aversion to risk;
- Emerging Markets: Emerging market securities are on sale, none more so than a handful of closed-end bond funds; David Tepper of Tepper Capital Management likes closed-end funds that trade at deep discounts (Positive on FAX, MSD, ESD);
- Streetwise: Positive on AMG: Money-management firms business model is based on buying stakes in boutique asset managers and taking a hands-off approach to their operations, and its one of the more promising bets in the sector.