Barrons summary: positive on BKS, TSN, TIME; speculates about the next M&A targets, including what might be on Google’s shopping list
- Cover story says a surge in mergers and acquisitions this year is cause for cautious optimism, and that as long as deal prices remain sensible, investors can expect another leg up for an aging bull market, and companies with takeover potential could fare especially well; Companies priced right for takeovers include IPG, AMCX, SNI, KSS, RKT, XRX, JAZZ, ALK, CTXS, FLR.
- Features: Positive on Time Inc.: Magazine company, currently trading on a when-issued basis, looks cheap relative to peers, and expected high dividend should make it competitive with MDP; Positive on Bank of China, ZTS, Svenska Handelsbanken, Admiral Group, Samsung, CB, INGR: Companies are among those whose cheap shares were highlighted at this years London Value Investors Conference; Positive on BKS: Shares of book chain are cheap, and a breakup, a dividend, or a big buyback could unlock value for shareholders.
- Trader: Positive on TSN: Though Tyson family controls company through ownership of class B shares and it doesnt have an attractive dividend, as it increases margins the P/E multiple will follow and shares could be a safe haven in a volatile market; Cautious on JE: Company is constrained by a leveraged balance sheet and nearly C$1B in debt, and cant likely continue paying a double-digit yield; Positive on CP: Railroad stock is outperforming the S&P 500 while efficiency ratios continue to improve.
- Tech Trader: With GOOG continuing to generate billions in cash flow to add to its $59B hoard, it is likely to continue its acquisitions spree; 12 potential targets for the search giant include RKUS, IPAS, WIFI, GOGO, STM, QUIK, NXPI, SPLK, NUAN, Jawbone, Fitbit, Sumo Logic.
- Small Caps: Positive on BRSS: Producer of copper strip and sheet, as well as brass rods used in the fabrication of faucets, hinges, and the like should benefit as housing market revives and it boosts capacity.
- Hedge Funds: Interview with Mario Cibelli, Founder, Marathon Partners (five largest holdings: SFLY, XOOM, LINTA, WWE, HAWK); Interview with Stephanie Pomboy, President, MacroMavens, who says U.S. consumer discretionary sector is the most vulnerable.
- Follow-Up: Negative on SHLD: Turnaround continues to elude troubled retailer, and until theres a reason to believe it is enjoying an operational renaissance, investors should avoid the shares; Following elections in India, some strategists see countrys market as ripe for a pullback before pushing higher, with broad funds such as EPI and IBN a good entry point; Cautious on AMBC: Investors should take recent giants and sell, then wait to see if shares drop below $20 for another buying opportunity.
- European Trader: Cautious on Dixons Retail, Carphone Warehouse: Some investors have been skeptical of proposed tie-up, thinking convergence is too far off, but the deal has some very real benefits, and will create a large company with unparalleled purchasing power.
- Asian Trader: Despite ongoing turmoil in Thailand, shares of strong companies are still up, meaning the only alternative for investors is to wait.
- Emerging Markets: With Chinas economy in a slowdown, countrys cosmetics market, the second largest in the world, remains a good place for investors (Positive on Shiseido, Amorepacific, JMEI, VIPS).
- Commodities: Severe drought in Brazil has dashed hopes for yet another bumper coffee crop from the worlds top grower, a situation that is likely to keep Arabica prices high this year."
- Streetwise: If the economy was really heading for a major fall, transportation stocks such as UNP, KNX, and DAL should have tumbled; Mergers that created new DAL, AAL, and UAL have reduced competitive pressure between the carriers; UPS shares arent as expensive as they look.