Barron's Summary: Positive on RL, AIG, KALU, SNDK, CMP; Cautious on FB, CAT, KMP
- Cover story: Cautious on KMP, KMR, KMI, EPB: The companies in the Kinder Morgan family of energy infrastructure companies offer a high-yielding way to participate in the booming U.S. energy infrastructure build-out, but shares are expensive based on conventional measures, and look unattractive compared with other big MLPs, with one issue of concern being the way distributions are calculated.
- Tech Trader: Cautious on FB: Tiernan Ray questions the rationale behind the WhatsApp deal, noting that even if a way is found to transform the messaging app into a money-maker, the investment wont be paid back for some time; The darker possibility is that Facebook simply had to do this given its slow growth among the 18-24 age group, which appears to be the sweet spot for WhatsApp, making the move part of a growing trend in which the big players are buying traffic, buying activity, buying phenomena.
- Trader: Its becoming more evident that 2014 seems to be taking on a complexion much different from the unbridled enthusiasm of 2013not necessarily bearish, but not particularly straight-up bullish either; Positive on RL: Clothing and accessory company doesnt seem popular on Wall Street despite solid financial results and popularity among consumers, shares are relatively inexpensive and make a good entry point for a long-term investor; Expiration of a Congressional tax break, known as bonus depreciation, last year means investors should probably look more closely at their stocks cash flows; CHK, PXD, and WQEP are among companies that could see a significant drop in cash-flow if bonus is not extended.
- Features: Positive on AIG, DFS, HAL, IR: Investors who chase the biggest yields dont always come out ahead; these four companies have modest yields, but dividends could double within the next five years, and shares are relatively cheap.
- Small Caps: Positive on KALU: Boom in commercial airline manufacturing is expected to continue for some time, a benefit to company that makes lightweight aluminum plate used in planes.
- Follow-Up: Positive on SNDK: As more corporations turn to flash memory for high-end servers, company remains a major player, and shares remain cheap, trading at just 13 times earnings estimates for 2014; Positive on CMP: Firm that sells salt to municipalities has seen a boost this winter, and share price could rise as municipal stockpiles of salt run low.
- Hedge Funds: Interview with Victor Khosla, Chief Investment Officer, Strategic Value Restructuring Fund, who says Europe is behind the U.S. in the distressed-debt cycle (picks: AAL, Edison Mission, Kloeckner Pentaplast, SolarWorld, Pfleiderer, McCarthy & Stone); Interview with Paul Walsh, meteorologist and analyst, The Weather Company, who says Weather is a significant driver of consumer behavior and therefore economic activity.
- European Trader: Positive on Svenska Cellulosa Aktiebolaget: Despite recent earnings miss, companys move to a focus on hygiene products could pay off as trading normalizes with Russia and China, and shares could rise 20% in the next 12 months.
- Asian Trader: Positive on BHP, RIO: Diversified mining giants have made progress since a drop in demand from emerging markets, and both stocks have room to run higher.
- Emerging Markets: In emerging markets, economic growth, central bank policies, and structural reforms have gained more weight in determining currency performance so far in 2014.
- Commodities: Time is running out for the chocolate industry to secure supplies of its most important ingredient, which means cocoa prices are poised to rise.
- CEO Spotlight: Profile of CSX chief Michael Ward, who has focused on costs, safety, and efficiency, making the railroad a leader in the industry.
- Streetwise: Cautious on CAT: Shares shouldnt really be rebounding, considering the fact that weakness in emerging markets and capital-spending cuts by minersthe two biggest factors in last years underperformancehave continued into 2014, though company does stand to benefit from growth in domestic non-residential construction.