Barron's Saturday Summary: Positive on TMUS, DFS, MDLZ, JCP; Cautious on KO, SHLD, PODD, TWTR
- Cover story: Four experts (Luis Carrillo of JPMorgan, Adam Kutas of Fidelity, Lewis Kaufman of Thornburg, and Jim Carlen of Columbia) discuss Latin America, where stocks are down 20% in the past 18 months, assessing the regions politics, economies, and financial markets to gauge what investors should buy; Four ways to play Latin America include diversified emerging market funds, alternative exchange traded funds, Latin America mutual funds, and stocks.
- Tech Trader: Positive on TMUS: Thanks to merger with MetroPCS, carrier, once seen as a has-been, is now competitive with T, VZ, and a newly-energized S; For investors, company is the only game to play in wireless stocks, according to Craig Moffett of Moffett-Nathanson, who also thinks T may make a bid for VOD as pricing in sector becomes ever more crucial.
- Trader: Cautious KO: At current P/E ratio, shares dont seem cheap, but valuation is the lowest its been in a long time, and with a dividend yield of 2.8%, shares could be good for income-seeking, volatility-averse investors; Cautious on IBM: Tech giant has announced another buyback, which may be a sign of managements lack of imagination for improvement; Cautious on PODD: Wall Street is excited about insulin device makers future, but valuation looks high, especially as the company is a one-trick pony, and a quarterly miss could give stock a jolt.
- Follow-Up: Cautious on SHLD: Sale of five Canadian store leases and potential spin-off of Lands End and Sears Auto Center arent easing doubts about retailers future, and current investor optimism seems misplaced; Positive on BK: Chief Gerald Hassells strong operating skills are evident in banks recent gains, and although shares are pricier than last year, they remain cheap; Positive on ELY: Shares are higher as turnaround under CEO Chip Brewer takes hold, and they are likely to see more upside ahead.
Features: 1) Cautious on TWTR: Microblogger could be a good investment at an expected offering price of $20, but paying more admits to a valuation of company that is hard to justify. 2) Positive on DFS: Credit card company may seem like an also-ran compared with V and MA, but investors should look at its big drivers--smart lending and new banking products, and at its ability to keep risk in check. 3) Positive on MDLZ, JCP, BA, Hitachi, ACAS: Companies were among the top picks of investors at the fifth annual Invest for Kids Investment Conference in Chicago, while fund professionals at the Sohn London Investment Conference liked TTM, DCC, Salvatore Ferragamo, Nordea Bank, Aurizon Holdings, and Experian.
- Small Caps: Positive on CVA: Waste company that converts garbage to energy is in an industry with high barriers to entry, which should keep competitors at bay and keep its own operation growing; with shares down, now is a buying opportunity.
- Mutual Funds: Interview with Don Kilbride, Portfolio Manager, Vanguard Dividend Growth Fund, who prefers companies that regularly increase dividends (top ten holdings: MCD, MSFT, UPS, WMT, IBM, MRK, TGT, PX, Roche Holding, JNJ); Interview with Donald Yacktman, President, Yacktman Asset Management, who says that on a risk-adjusted long-term basis, PEP, PG, and KO look like undervalued AAA bonds."
-European Trader: Positive on Compagnie Financiere Richemont: Luxury goods maker is under pressure in China, but because it wields substantial pricing power and its innovative design and manufacturing create high barriers to competition, the long-term outlook is bright.
- Asian Trader: Investors can make a profit in Hong Kong housing, but the market swings wildly, so timing is crucial (Cautious on Sun Hung Kai Properties, New World Holdings, Cheung Kong Holdings, Hutchison Whampoa).
- Emerging Markets: Both Brazil and Mexico have consumer-driven economies, but beyond that are very different; some people think Mexicos recent gains will flatten out, while others see it as a new power; observers say the best deals in both countries are to be found in smaller companies and the funds that hold them (Positive on TEMRX, Linx, Iochpe-Maxion, EWW).
- Commodities: Rally in sugar is crumbling, and a turnaround in prices is likely in 2014, but the rest of this year could attract the sugar bears, and investors taking advantage of falling prices can find some deals.
- CEO Spotlight: Profile of VZ chief Lowell McAdam, who is deeply involved in the nuts and bolts of the telecoms business, and is fond of making surprise visits to stores to check on the way they are run.