Barrons Summary: positive on FITB, wireless tower companies; cautious on Dell purchase of EMC
Cover story: Fifty-five percent of those surveyed in Barron's biannual Big Money poll call themselves bullish or very bullish about the market's prospects through next June, as opposed to 45% in the spring survey; Bulls see the Dow ending the year at 17,140, below Friday's close but well above where the market traded in mid-September.
Features: 1) Cautious on Dell: Dell's acquisition of EMC could earn investors a 10%-plus return through the closing of the $67B deal, though questions remain about the way it is being structured; in the long term VMW shares could be punished and bankruptcy risk isn't trivial; 2) Positive on FITB: Though the bank is shuttering branches amid technological changes, it's offering more business loans and digital products and is cutting costs, and shares could rise by 25%; 3) Positive on AMT, CCI, SBAC: Wireless tower companies-which have converted to REITs or are in the process of doing so-dominate the industry and are growing as carriers struggle to keep up with demand for mobile data, but they trade at a discount to REITs and have 20% upside.
Tech Trader: Cautious on INTC: Cloud computing may be taking away corporate spending faster than mature tech firms such as the chipmaker can adjust; The change is leading to a "massive shift of spending from the traditional buyers of equipment and software" to companies such as AMZN, MSFT, and GOOG.
Trader: "A continuation of mixed-to-sluggish U.S. data releases increasingly has investors believing the Fed won't act this year"; Columnist Vito Raccanelli says "Our view remains that there isn't much out there to back a sustained breakout of the stock market's range-up or down-in the medium term"; Positive MET: Insurance giant is looking cheap again, with its challenges mostly discounted by the stock price, and it's worth a look for long-term-oriented investors seeking steady income; Cautious on PFPT: Company has seen revenue growth, but not sustainable earnings; despite a robust client list, it has yet to turn a profit, and may have trouble doing so in the future.
Interview: Chris Davis, chairman of Davis Advisors, thinks the opportunities in financials are as compelling today as they were in 1991 when he launched the firm (picks: JPM, AXP, MKL, ACE).
Profile: Joe Deane and David Hammer, portfolio managers, Pimco, favor municipal bonds backed by strong revenue (top 10 holdings: Tobacco Settlement bonds, DeKalb Georgia Water/Sewer, Ohio State Water Authority, Public Authority Colorado Energy, Cuyahoga Ohio County Bonds, Jefferson County Alabama Sewer, MTA-NY Revenue bonds, California Public Works bonds, Maryland Health & Higher Education, Bay Area Toll Authority).
Small Caps: Positive on TRCO: Shares have taken a beating along with others in the sector, but with a strong portfolio of holdings the media company is asset-rich, and given the discount shares fetch to asset value, shares are likely to rise during the next 12 months.
Follow-Up: Positive on JPM: "The bullish argument for JPMorgan Chase wasn't undone by mildly disappointing third-quarter results reported last week," and shares could rise from a recent $62 to $75 and offer a 2.8% yield;
European Trader: Positive on FCAU: Investors who want exposure to the soon-to-be-spun-off Ferrari should by shares in its parent instead, which will benefit from any boost in the luxury automaker's shares because of its 90% stake.
Asian Trader: Positive on IMAX: With China's box office the world's second largest and on track to surpass the U.S. in 2017, the listing of IMAX China comes at a good time for investors.
Emerging Markets: Turkey's "equity markets may look tempting, but there are multiple risks: a weak currency, rising oil prices, interest-rates, and complex political strife."
Commodities: In the wake of a rough 18-month stretch, U.S. propane prices may be on the verge of a sustained rebound as a new fleet of delivery ships enters the picture.
CEO Spotlight: MDT chief executive Omar Ishrak has fundamentally reshaped the medical-device maker since taking the helm, with a focus on becoming a leader in value-based healthcare, expanding into emerging markets, and improving innovation.
Streetwise: "It's time to stop betting on rates and focus on other parts of the banking business," says Ben Levisohn.