Barron's Saturday summary: positive on AAPL, MSFT, VC; cautious on PFG, YHOO
Cover story: Barrons 10th annual list of the Worlds Best CEOs; New to the list are Richard Anderson of DAL, Mark Donegan of PCP, Reed Hastings of NFLX, John Martin of GILD, Leonard Schleifer of REGN, Masayoshi Son of Softbank, Jeffrey Sprecher of ICE, and Mark Zuckerberg of FB.
Features:
1) Positive on AAPL: A new iPhone with a larger screen to better compete against offerings from Samsung could boost Apples second-half earnings by 10-15% and give users a new reason to upgrade, lifting shares by 20% or more, while a buyback could also be in the works;
2) Cautious on PFG: Current share price doesnt reflect companys attractive long-term position as a global money manager, and if multiple were accorded it following that viewpoint, shares would be worth 25% more; 3) Positive on VC: Shares, now in the mid-$80s and cheaper than rivals such as HAR, JCI, and DLPH, could reach $100 in the next 12 months as results improve and company buys back stock.
Tech Trader: Positive on MSFT: Companys decision to offer Office for the AAPL iPad was a good one, but despite the fact Office is a cash cow, cloud computing is the key to the companys future; that market is in an early, evolutionary phase and will eventually coalesce around a few top vendors, presenting an opportunity for Microsoft.
Trader: Positive on TGT: In a market where few stocks of strong, reliable, dividend-paying firms are cheap, Target looks attractive despite recent hit to its reputation from data breach; Positive on TWTR: New report from Markit finds that some tweets provide the basis of important, short-term sentiment indicators, and when properly collected, scrubbed, and analyzed, can help build a trading portfolio that beats the market; Cautious on CWH: If shareholder vote to replace entire board holds up, shares could eventually reach $30 from current $22.
Small Caps: Positive on MDR: At current prices, shares already reflect concerns about execution problems and cost overruns due to expansion of fleet capabilities, and they could be poised for gains over the next 18 months.
Mutual Funds: Interview with David Rolfe, Portfolio Manager, RiverPark/Wedgewood Retail Fund (top ten holdings: BRK.B, AAPL, ESRX, QCOM, CTSH, EMC, MTB, CMI, SRCL, PRGO); Interview with Marko Dimitrijevic, Founder, Everest Capital (top picks: XPO, SUNE, TTM, Brasseries et Limonaderies du Rwanda, Fawaz Abdulaziz Alhokair).
Follow-Up: Cautious on YHOO: Shares are up mostly because of strength of Alibaba stake, which for now gives chief Marissa Mayer breathing room to implement her strategies, but its hard to see the formula turning Yahoo into a media force anytime in the near future, much less returning it to its former glory; Positive on MSG: If new Knicks president of basketball operations Phil Jackson is allowed free rein in his five-year deal, shares could rise 25%.
European Trader: Positive on Gtech: Recent earnings disappointed, but company could generate good returns for shareholders by consolidating dominance in Italy, winning more contacts in the U.S. and in international markets, and eking out fatter profit margins.
Asian Trader: Positive on Bank of China: As Chinas credit conditions worsen, bank seems to be the safest pick among countrys big players, partly due to overseas operations that wont be affected by domestic economic slowdown.
Emerging Markets: Russia faces a number of economic challenges, including corporate governance issues, high interest rates, an aging population, and reliance on commodities, making it hard to forge an investment strategy (Positive on Magnit; Negative on Pharmstandard, Surgutnetflogas).
Commodities: Ukraines farmers are using wheat and corn to hedge against the risk of a currency crisis, and the uncertainty has the potential to drive prices even higher in markets worried about countrys supplies.
Streetwise: What really unnerves investors, says Kopin Tan, is how the U.S., which led the world into quantitative easing, may have to lead the world into monetary tightening.