Barron's Summary: Positive on AMZN, UTX, AL, CUB, PNRA, MSFT, RY, CSCO
Cover story: After 50 years at the helm of Berkshire Hathaway, Warren Buffett is still going strong, having made huge profits off the recent Heinz/Kraft deals, for which Wall Street hasnt given the firm enough credit; The company is better than ever despite the lackluster performance of its big equity portfolio, which is dominated by four stocks: AXP, KO, IBM, and WFC; Downside appears limited, given the companys rising book value and its willingness to aggressively repurchase stock at 1.2 times book value, backed by a formidable balance sheet with $58B in cash.
Tech Trader: Positive on AMZN: Tiernan Ray says the important takeaway from online retailers earnings report was the strength of Amazon Web Services, which has profound implications for traditional computer companies, such as IT vendors IBM, HPQ, Dell, and CSCO; Cloud companies such as N, CTCT, NOW, and WDAY could become acquisition targets; Security providers such as PANW and FTNT, though expensive, could become more attractive for investors.
Trader: Positive on UTX: The market is giving the company too little credit for its long-term outlook; Positive on RF: Large regional bank sells at a discount that seems too wide now that its credit profile has improved markedly and its operations have gained strength, and shares offer a nice margin of safety; Positive on AL: Though slowing economic growth and low jet-fuel prices could prompt airlines to delay the purchase of new planes, company trades at an inexpensive valuation and has sustainable tail winds.
Features: 1) Positive on CUB: Companys card readers, passenger gates, and ticket-vending machines are essential products, and it has few competitors; a surge in demand could lead to 25% upside for shares; 2) Positive on PNRA: Food chain has long been plagued by long wait times in its restaurants, but a business upgrade that will bring self-serve kiosks should improve that and give shares a boost; 3) Positive on MSFT: Despite a weak quarterly report and the Nokia writedown, companys Windows giveaway strategy could make the franchise more valuable, and its transformation to a cloud-based software firm could lift shares 50% in three years; 4) Positive on RY: Banks RBC Capital unit had a 6.2% total return in the first half, taking first place in the semiannual Barrons-Zacks ranking of brokers focus-list stock recommendations.
Profile: Nathaniel August, founder of Mangrove Partners, which has returned more than 28% a year with relatively subdued volatility since its launch in April 2010. Interview: Rupal Bhansali, money manager, Ariel Investments (picks: MSFT, GSK, GILD, BIDU, BAP, ITUB).
Follow-Up: Positive on CSCO: Companys valuation could rise as investors begin to see it as an Internet-of-Things play rather than a moldy old hardware maker; Positive on GM: Barrons stands by its prediction shares will hit $50, knowing it will require whiplash-inducing gains through the end of the year.
European Trader: Positive on BTG Plc: British healthcare company is still shaking off the effects of slower-than-expected sales for Varithena, but it is likely to make a full recovery.
Asian Trader: Bridgewater Associates has changed its view on China, and now believes that the countrys stock market gyrations are negative for growth, and a further crash could tank Chinas growth in GDP for years.
Emerging Markets: For its reform agendawhich seeks to create millions of manufacturing jobsto work, India must abandon protectionist policies and expand global trade liaisons.
Commodities: Zinc looks poised to shelter investors from the storm raging across metals markets, and it isnt likely to be part of a commodity price decline.
CEO Spotlight: AA chief executive Klaus Kleinfeld has lessened the companys dependence on commodity products and changed the way alumina is priced, and it is increasingly becoming known as a manufacturing innovator.
Streetwise: DDs spinoff of its specialty chemical business, now trading as CC, is the poster child for botched spinoffs this year.