Barron's Summary: positive on select retailers, JCI, ORAN; cautious on GPRO
Cover story: Investors are fleeing the retail sector as American consumers rein in spending and as bricks-and-mortar stores face growing threats from AMZN and other Internet-focused retailers, creating an opportunity for investors to buy shares cheaply (Positive on BBBY, GME, SPLS, TGT, TJX, WFM). Features: Positive on JCI: Disposal of its auto-interiors business should give added credibility to companys vow to manage capital more aggressively, a commitment that could have a very favorable long-term effect on its share price, which could jump 20% or more; Positive on ORAN: With competitive pressures easing and potential to generate about $4.5B in annual free cash flow over the next five years, along with a 5.3% dividend yield, shares could see a 25% rise.
Tech Trader: Cautious on GPRO: As accessory makers perfect wearable mounts for smartphonesand they inevitably willit becomes hard to justify GoPros competitive advantage, particularly at 83 times earnings; Cautious on OVTI: Companys digital-image sensors are no longer used in iPhones, freeing it from being tied to AAPL but raising questions about its long-term potential.
Trader: Despite the contraction in U.S. GDP in the first quarter, theres a basic market assumption that the economy is on a growth track, if a slow one, says Richard Weeks, partner at HighTower Advisors; Positive on BA: Despite a confluence of mostly non-fundamental and macro factors leading to a drop in share price, companys long-term attractions remain, and the outlook remains strong; Cautious on HE: Utilitys 2013 results look good at first glance, but company has seen little or no sales growth for three years and it continues to face a threat from solar power rivals.
Small Caps: Positive on RYAM: Worlds largest producer of specialty cellulose is the leader in a highly concentrated industry, and shares have plenty of upside over the next few years.
Mutual Funds: Interview with Guy Pope, Portfolio Manager, Columbia Contrarian Core Fund (top ten holdings: AAPL, JPM, VZ, C, CVX, CVS, JNJ, PG, PM, CMCSA); Interview with John Hathaway, Co-Manager, Tocqueville Gold Fund (picks: Detour Gold, B2Gold, Torex Gold Res). Special Report: Profile of three top financial advisory teams, Savant Capital Management, Graystone Consulting/Sherer Team, and Venture Services Group.
Follow-Up: Positive on DOV: Move to spin off smartphone component maker KN to shareholders looks like it will continue to pay off for investors, shares could appreciate by 10-15% over the next 12 to 18 months.
European Trader: Cautious on Banco Espirito Santo: Though bank was target of investor angst last week, the real problem is unlisted conglomerate Espirito Santo International, which indirectly controls the bank and which missed an interest payment on some short-term debt.
Asian Trader: Beneficiaries of Indian prime minister Modis new budget are likely to be infrastructure projects, manufacturing, insurance, defense, and power generation companies.
Emerging Markets: Positive on Prada: Investors have sold shares on fear that growth in China which accounts for a third of saleswill slow, but the worry seems overdone, and analysts expect a gradual revival in earnings.
Commodities: Copper prices are heading higher, with investors betting that ramped-up manufacturing in the U.S. and China will spur demand for the industrial metal.
CEO Spotlight: Profile of QCOM chief Steven Mollenkopf, who says the companys next pivot will be towards the so-called Internet of Things.
Streetwise: Jim Paulsen of Wells Fargo Capital Management thinks a correction, when it comes, could look a lot more like a bear market than your run-of-the-mill selloff