Barron’s Saturday summary: positive on NLSN, TXI and Samsung; cautious on T, TWTR, SKX
- Cover story: Special report on the Best Mutual Funds Families; list is topped by Natixis Global Asset Management, followed by Putnam Investment Management, GE Asset Management, Lord Abbett & Co., and Waddell & Reed Investment Management.
- Tech Trader: Tiernan ray says on Wall Street, metrics such as user growth and engagement have become equally or more important than earnings results for companies such as TWTR, LNKD, YELP, and NFLX, since much of their value is fully reflected in their share prices, and the market needs justification beyond quarterly earnings to keep buying.
- Trader: David Kotok of Cumberland Advisors says jobs data is neither encouraging or discouraging, noting that the longer view is that some 150,000 to 200,000 jobs are being created monthly, on average; inflation is low; the Fed remains accommodative; and the quality of earnings is good; Cautious on T: Companys nearly 6% stock dividend yield is significantly higher than its bond yield, suggesting that the equity market thinks the company has zero growth prospects or that its dividend is imperiled, or both; Cautious on SKX: Once high-flying stock has made important changes that are bearing fruit, including improving its cost structure and carving out a fashion niche in footwear, but lack of a dividend and two classes of stock, as well as potential volatility, may give investors pause.
Features:
1) Positive on Samsung: Investors have been worried about Korean giants short-term growth, but with a huge memory-chip and display manufacturing business, it has cost advantages other smartphone makers cant match; shares are deeply discounted and have a potential 30% upside, but lack of a U.S. listing makes the stock hard for Americans to buy.
2) Interview with Jane Mendillo, CEO, Harvard Management, who says endowment is looking at emerging markets over a five-to-10-year time frame, in which context they are attractively priced today.
3) Positive on NLSN: Company has a near monopoly on measuring the market share of various media outlets, and with a new growth plan, expanding top line, and a strong financial position, shares could rise 40% to about $62 in two years.
4) Cautious on AFSI: Companys expenses appear lower than those of rivals, which could be due to a more aggressive approach to deferring costs; on earnings call this week, it will need to persuade investors its profits actually result from smart management.
- Follow-Up: Negative on TWTR: Companys massive stock grants to employees have resulted in significantly understated expenses and overstated earnings, and shares are likely to head lower, perhaps into the $30 range; Positive on TXI: Company, that last pure-play cement maker in the U.S., will be acquired by MLM, but investors shouldnt rush for the exits, since the latters stock could climb to $128 from $106 after the deal.
- Mutual Funds: Interview with Robert Mancuso, Portfolio Manager, Glenmede Small-Cap Equity (top picks: TGI, MMS, SGY, THO, ENS, MDAS, PL, MTZ, ATW, WAL).
- European Trader: Positive on Unibail-Rodamco: Europes largest listed commercial real estate company could provide investors with concrete returns in 2014 and beyond, with a 20% climb possible in the next 12 months as it raises rents, delivers new properties, and cuts under-performing ones.
- Asian Trader: The performance of Asian markets this year will depend on the strength of the recovery in Japan and growth in the regions trade flows; strategists suggest investors test the waters in Korea, Taiwan, the Philippines, India, and Japan.
- Emerging Markets: As a bigger chunk of Chinas shadow-banking trusts come due this year, more default headlines could further hurt confidence in China just as its growth prospects dim.
- Commodities: Frigid temperatures in parts of the U.S. have boosted demand for natural gas, propane, and heating oil, but prices of the latter are likely to stay high even as the weather grows warmer because of low distillate stockpiles.
- CEO Spotlight: Profile of ICE chief executive Jeffrey Sprecher, who early on while building firm established close relations with GS and MS, giving the banks an ownership stake in order to get their order flow.
- Streetwise: Following the biggest weekly investor pullout from mutual funds and ETFs, along with a dip in the DJIA, social media darlings from TWTR to FB are correcting.