Barron's Summary: Positive on MSI and ODFL
Cover story: Japan's corporations, which have long "worked to protect market share, head count, and influence while hoarding cash at the expense of profits and and shareholder returns," are beginning to change as they face pressure from government, investors, and peers; Investors should look for Japanese companies with the potential for fast profit gains following reform, such as Hitachi, Nippon Telegraph & Telephone, TM, Mitsubishi Heavy Industries, and MTU.
Features: 1) Positive on MSI: Amid growing demand, cost-cutting initiatives, and buybacks, public-safety communications company's shares could deliver a total return, including dividends, of more than 45%; 2) Cautious on TOT, Royal Dutch Shell, Eni, Statoil: European oil companies have worked in Iran, and are likely to return when sanctions are lifted, but the country's oil industry needs billions of dollars in investment to get back up to speed; 3) Positive on ODFL: Trucking company has hit some bumps, but it continues to gain market share, and its strong focus on customer service sets it apart from rivals; with the share price down 17% from a 52-week high in early December, now is the time for investors to buy; 4) Story looks at how the Bureau of Labor Statistics calculates unemployment numbers, noting that a close look reveals the rate may be over-counting rather than undercounting the unemployed.
Tech Trader: Cautious on INTC: Chipmaker's recent announcement that the next generation of its most advanced chips won't be ready until summer 2017 has prompted concern it could be losing its legendary manufacturing lead; But if rivals TSM and Samsung, which face similar challenges, stumble, Intel could become more powerful; Intel's delay could also "fuel the fire of competitors" such as QCOM and ARMH.
Trader: "Although U.S. economic data released last week were a mixed bag, many companies reported Q2 results that beat expectations, albeit lowered expectations," says Jack Ablin of BMO Private Bank; Cautious PG: Consumer product giant needs to create products that entice consumers to pay up for the brand name, but in the near term, without a market correction, the company is unlikely to outperform; Positive on WYNN: Amid turmoil in the Macau casino market, company's shares look cheap, with most of the bad news incorporated into the price, and long-term investors may see a payoff.
Small Caps: Positive on ENR: Company's shares have jumped 22% since the July 1 spinoff of its consumer products brands, and more gains could be ahead.
Profile: John Maxwell, portfolio manager, Ivy International Core Equity fund (top ten holdings: Svenska Cellulosa Aktiebolaget, Fresenius SE, Dai-ichi Life Insurance, Mitsubishi Heavy Industries, SoftBank, WPP, TEVA, China Construction Bank, ING Groep, Tokio Marine Holdings).
Interview: Rebecca Patterson, chief investment officer, Bessemer Trust, says the U.S. economy is in the late stages of an expansion, and that wages and corporate profit margins will influence the firm's view on when to start paring back equities.
Follow-Up: Positive on JPM: Firm is one of few big banks trading for less than 11 times estimated 2016 earnings that could produce double-digit profit gains in the next two years; Cautious on M: Retailer needs to pay special attention to the tax implications of the REIT strategy proposed by Starboard Value so as to avoid harming its multi-channel strategy.
European Trader: "After months of torpor, the eurozone's economic outlook is suddenly and unexpectedly improving," not because Greece's situation has stabilized, but because of macroeconomic factors.
Asian Trader: Banking and financial services such as asset management and insurance will be among the beneficiaries of the Trans-Pacific Partnership, while the apparel and dairy industries may take a hit.
Emerging Markets: Cuba, one of the world's most closed economies, will not see rapid change despite the normalization of relations with the U.S., but the government is trying to promote growth.
Commodities: Soybean prices are up again, boosted by stronger demand and uncertainty about the next U.S. harvest, and the acreage this year will be the largest ever.
Streetwise: Ben Levisohn says biotech is the "forgotten bubble," and that the sector might be approaching the time when valuations become excessive; Jonathan Gilonna of BCS looked at companies that could afford buybacks, screened out those with a ratio of less than 5% free cash flow minus dividends to market cap, and found that C, EW, and UNH are likely candidates to make them this year