Barrons Summary: Cautious cover story on BABA; Positive on AAPL, SVU, IFX.DE
Cover story: Cautious on BABA: Wall Street's optimism about the Chinese e-commerce giant is stronger than it should be, and though 45 of 52 analysts covering it maintain Buy recommendations, a decline of 50% looks likely amid a number of challenges, including slowing growth rates and profit margins; additional pressure could arise when the IPO lockup expires.
Features:
1) Positive on Infineon (IFX.DE): Germany's largest chipmaker is defying the slump in the sector, creating a buying opportunity for company that is investing in advanced chip-wafer technology and the vehicle market, and which is "a hot rod priced like a hatchback";
2) Positive on AAPL: Company's recently announced new products were overshadowed by its iPhone leasing plan, which could "be a game-changer for the stock because it addresses slowing iPhone growth, the primary bear case for shares;
3) Positive on SVU: Company could unlock substantial value if it spins off its deep-discount Save-A-Lot chain, which has been growing at a faster clip than its other operations.
Tech Trader: More pain is likely to hit the semiconductor sector, and "the urge to buy chips smells like wishful thinking" given a slowdown in the PC industry and China's slump, which has yet to show up in reported results (cautious on INTC, KLIC, MRVL, TXN, MCHP).
Trader: If the Fed raises its interest-rate target, says Lori Heinel of State Street Global Advisors, the market is likely to have a "knee-jerk negative reaction"; Cautious on UAL: Under new chief Oscar Munoz, the carrier has a chance to improve customer service, product reliability, and cost position, and it plans to hold capacity growth to below GDP growth; Positive on Atlantia, Intesa Sanpaolo, Enel, Telecom Italia: Amid an improving Italian economy and lower unemployment, shares of some companies look inexpensive.
Small Caps: Positive on DRII: Shares are down amid overall concern about the leisure industry, but the acquisition of smaller time-share operators at cheap prices during the recession could push them back up by 70%.
Profile: Thyra Zerhusen, lead manager, Aston/Fairpointe Mid Cap fund, likes easy-to-understand, stable businesses at reasonable valuations that have been overlooked by most Wall Street analysts (picks: MAT, TGNA, CPA).
Interview: Joe Rosenberg, former chief investment officer at Lowes Corp, is bullish on JNJ, PFE, CVX, GM, and F.
Follow-Up: Positive on MEG: Company's bid for MDP should boost cash flow and create $80M in synergies, and Wall Street may be underestimating the potential benefits of Media General's boost in broadcast exposure because of the deal.
European Trader: Positive on Wirecard: Munich-based company, Europe's largest online-payment service provider, could offer 25% upside, though some investors see a potential return of as much as 60%.
Asian Trader: Long-term investors in India will need patience, because prime minister Narendra Modi's ambitious reform and modernization plans have been stalled.
Emerging Markets: Brazil and Nigeria won't be able to hide behind "bad fiscal and monetary policies when commodity demand dries up."
Commodities: Though silver prices are near the end of a long decline, it may still be too early for investors to dive in.
Streetwise: Positive on PWR: Shares of company that serves the electric-power and oil-and-gas industries have fallen but they look inexpensive, and much-needed upgrades in the electricity and pipeline sectors could send them up 31%.