Barron’s summary: positive on RF; Cautious on SUNE
Cover story: India offers potential for investors, and though controversial, Narendra Modi, Indias likely new prime minister, is that nations best shot at an economic turnaround; To avoid problems, investors should focus on themes like infrastructure and Indias rising middle class (Positive on MINDX, EPI, INDY, Bajaj Auto, Gujarat Pipavav Port, ICICI Bank, IDFC, Mahindra & Mahindra, Shriram Transport Finance).
- Features: 1) Cautious on SUNE: Company has turned around operations by shedding bad businesses and planning a public spinoff of semiconductor wafer factories, but much of the value of a publicly held subsidiary that would own its finished solar projects and pay out cash flow tax-free stems from subsidies, which could be short-lived; 2) Positive on RF: Stock has more than tripled since 2011, and could climb another 30%. Shares trade at just 90% of companys book value, versus an average of 130% for peers; 3) Cautious on AWK, Beijing Enterprises Holdings (392.HK), DHR, HDS, RXN: Companies offer exposure to the growing investment in water infrastructure and shares look cheap, but investors need to look carefully at their valuations and the logic behind them.
- Tech Trader: Cautious on TWTR, YELP, LNKD, FB: Tiernan Ray says it remains hard for anyone to truly predict what the metrics bode for any company in any quarter in the tech sector, meaning the stocks will continue to be volatile; Recent report from S&P Capital IQ finds investor activism is good for stock prices, but meaningless for building a great business.
- Trader: Despite the release of mostly positive economic data, particularly on Friday, traders say that escalating tensions in Ukraine are causing investors to hesitate; Positive on HTZ: Spin-off of equipment rental business, which will be known as HERC, should give both newly independent companies a boost; Positive on MUSA: Gasoline retail chain, spun off from MUR, is undervalued, and there are catalysts that could send the stock higher in the next year or so.
- Small Caps: Positive on HSC: Leading global provider of services to steel makers has seen its turnaround stalled, but if new CEO Nick Grasberger can pull it off, the stock has a bright future.
- Follow-Up: Negative on TWTR: Companys off-the-charts stock compensation should worry investors because it shows managements willingness to significantly dilute shareholders, which along with a high valuation and slowing growth make the stock one to avoid; Economists at Applied Global Macro Research believe that 4% annual growth in real GDP has already started in the current spring quarter.
- Mutual Funds: Interview with John Rogers, Jr., portfolio manager, Ariel Fund (top ten holdings: KKR, LAZ, JLL, RCL, CBG, SLCA, WU, BRS, GCI, AXE); Interview with Douglas Chudy and David Dusenbury, portfolio managers, Dalton Greiner Hartman Maher, who say the market is moving in the right direction, presenting opportunities for investors (picks: RF, KS, INGR, ALL);
- European Trader: Mergers and acquisitions are making a comeback in Europe, which has a large number of candidates because it remains relatively cheap (Positive on Shire, UCB, Actelion, Reckitt Benckiser, Fastweb, Jazztel, Bouygues);
- Asian Trader: With Korean market down, Jefferies & Co. strategist Sean Darby suggests investors look at preference shares in companies such as Samsung, Hyundai, and LG Chemicals, as well as engineering and construction companies that have seen a pickup in demand from Middle Eastern projects, such as Hyundai Engineering & Construction;
- Emerging Markets: One reason behind selloff in emerging markets is the growing understanding on the part of investors that these markets operate in more volatile political environments than their developed counterparts do;
- Commodities: The U.S. is producing the most crude oil in decades and domestic stockpiles are at record highs, but prices still remain steep because of a range of factors; CEO Spotlight: Profile of DD chief Ellen Kullman, who says science and technology will become the companys focus, while its chemical business will soon be out; Other Voices: In opinion piece, Carl Icahn explains why he disagrees with Warren Buffetts decision to abstain from voting on an excessive executive compensation pay proposal at KO, and calls for change in the way boards are chosen and operate;
- Streetwise: Strategas Research Partners Jason Trennert thinks investors may be better off looking at big, safe stocks such as DE, PFE, and RTN, which could benefit not only from solid earnings growth but from the fact investors may be willing to pay more for them.