Barron’s summary: cautious on CACQ, CZR, LE, LOCK, DLLR
Cover story: Highflying stocks, led by Internet and biotech firms, are falling (Cautious on FB, LNKD, NFLX, N, NDLS, PBPB, CRM, NOW, TWTR, WDAY, Z), and with the exception of a nicely profitable FB, most look richly priced; overall the stock market seems healthy, with reasonably priced stocks doing well (Positive on AAPL, T, CAT, CVX, CSCO, DE, XOM, GOOG, JPM, MS, SPG, SO, WFC), a sign the market may be in the midst of a correction.
- Features:
1) Cautious on CZR, CACQ: Shares are down amid several concerns, including bondholder move to void asset sales and the possibility a debt restructuring could dilute equity holders, a situation pitting private equity firms APO and TPG against Oaktree Capital and Appaloosa Management;
2) Cautious on LE: Clothing retailer has spun off from parent SHLD, but shares arent cheap, company carries a lot of debt, and growth could be hampered because of close ties to its former parent.
- Tech Trader: Amid a drop in tech stocks, there may be opportunities for investors; Tony Ursillo of Loomis Sayles suggests buying selectively, as the promise for tech shares has not completely fallen apart (Positive on CRM, WDAY, PANW, CVT); Fred Hickey, publisher of the High-Tech Strategist, reduced put options on FB, YELP, TSLA, and CNQR, but is buying longer-dated put contracts on LRCX and XLNX.
- Trader: Its been 18 months since investors have experienced this kind of volatility, and many view the pain as a healthy corrective after a huge run-up; Cautious on LOCK: Identity theft is a major concern, fueling bullish expectations, but a close look at results and a sober view of future customer uptake suggests the shares are overpriced; Cautious on DLLR: Shares of payday lender, the largest in the U.K., have suffered, but investors say terms of buyout offer from private equity firm Lone Star Funds could be better.
- Small Caps: Positive on POST: Food giant continues to thrive under leadership of CEO William Stiritz, who has taken it into private-label and popular active nutrition products, and his strong track records bodes well for the future.
- Follow-Up: Negative on DDD, XONE, SSYS, VJET: 3-D printing shares, facing a highly competitive market, still have farther to fall; the technology may one day upend manufacturing, but the current crop of public stocks wont necessarily be the beneficiaries.
- Special Report: Retirement: Barrons looks at several strategies to help investors navigate a changing interest-rate landscape, including buying individual bonds of different maturities and holding them all to maturity; using ETFs to track various bond indexes; and opting for active management to take advantage of market swings; For people planning retirement, managing Social Security benefits is as important as managing investments.
- Mutual Funds: Interview with Christopher Towle and Steven Rocco, Portfolio Managers, Lord Abbett High Yield (top ten issuers: Sprint, First Data, T-Mobile, Intelsat, Dish, Energy Future Intermediate Holding, Clear Channel, Alliance Data, Seven Generations Energy, CHS/Community Health); Interview with Mike Avery and Ryan Caldwell, Co-Managers, Ivy Asset Strategy Fund, who say their main worry is what management should do with all the return on equity central banks have gifted them.
- European Trader: Greece is making progress toward a recovery, but opportunities for investors arent for the faint-hearted, though banks and a few other equities offer potential (Positive on Piraeus Bank, Hellenic Telecommunications, Coca-Cola HBC); Any weakness in Lafarge and Holcim shares following merger announcement could be a buying opportunity.
- Asian Trader: Malaysia, which exports electronics components, oil, gas, and palm oil, is more leveraged to global growth than many neighbors.
- Emerging Markets: Frontier markets have been on a tear, benefiting in part from investor worries about major emerging market countries like Brazil and China, but the star turn may be brief amid ongoing pressures.
- Commodities: Canola futures have rebounded from 3-1/2 year lows, and increasing demand is likely to push prices even higher.
- Streetwise: Though utilities remain hated on Wall Street, its still possible to find growth in those with large, non-regulated businesses such as SRE.