Barron's Summary: positive on THC, BSX and junk bond market; cautious on TSRA
Cover story: Recent price swings in the market have presented buying opportunities for "volatility lovers" such as Craig Blum of TCW Select Equities (bought AMT, CVS, CRM), Douglas Rao of Janus Forty (bought CMG, GE, CSGP), and Bill Smead of Smead Value (bought AMGN, AXP, TGNA). Features: 1) Positive on THC: Shares of hospital and outpatient-surgery-center operator are down over concerns about lower admissions and a large amount of debt, but shares could rise about 15% on stronger earnings and revenue, and they offer good value; 2) Positive on BSX: Medical-device maker's stock is up, but the strong dollar has masked growth and the shares could still see another 20% upside; 3) "Despite fear-mongering by Carl Icahn, the junk-bond market is starting to look appealing," and now may be a time to buy, even in the mining and energy sectors, which have fallen precipitously; 4) Cautious on TSRA: Company "revived after an activist fund took control in 2013. But the way it characterizes revenue raises questions about its prospects."
Tech Trader: Positive on FB, GOOG: The two companies increasingly dominate the world of online advertising, leaving little money for other players, and though shares are up at both, more upside is likely in store.
Trader: As large as the U.S. economy is, it's not big enough to make up totally for falling sales overseas, says Malcolm Polley of Stewart Capital, who adds that in the medium term, "blah returns for equities make sense"; "The broad market faces several problems, some of which should be resolved before resuming a bullish march," but 2016 EPS is expected to be up 10%, and the worst should be over for energy; Cautious on VRX: Pharma giant is buying drug companies, cutting costs, and hiking drug prices, but it "effectively capitalizes its R&D costs on its balance sheet, amortizing those expenses over a long period of time," thus inflating earnings.
Small Caps: Positive on FLWS: Flower delivery company's acquisition of gift retailer Harry & David could spur growth for many years because of its success in tapping synergies, and the share price is likely to rise as a result.
Mutual Fund Quarterly: Q&A with Will Danoff of Fidelity Contrafund, the country's largest actively managed equity mutual fund, which has beaten the S&P 500 during the past one, three, five, 10, and 25 years (picks: GOOG, FB, BRKA, AMZN, TSLA); "Interest rates may rise, but most money-market funds won't see much increase in yield. Consider bank money-market accounts and short-term bonds"; "The disconnect between investors' perceptions of green-energy companies and their actual business has created a buying opportunity" (Positive on FAN, PBD, QCLN).
Follow-Up: Positive on RL: Under new chief Stefan Larsson, "profit is expected to grow at a double-digit clip for the following two years" and shares could see a 16% gain.
European Trader: Positive on Fresenius: German company "is a rare bright spot in Europe's stormy equities market, offering investors solid growth along with the currently all-important defensive qualities of the health-care sector," and it's likely to benefit from increasing healthcare coverage in emerging markets.
Asian Trader: The Philippines, trading at just 15.5 times next year's earnings, doesn't appear too expensive, says Alfred Dy, head of research for CLSA in Manila, and the country's business-processing outsourcing sector is likely see increased demand from U.S. companies.
Emerging Markets: To counter China's slowing economy, Brazil's problems, Russia's sabre-rattling, and the crowded, expensive India trade, Devan Kaloo of Aberdeen Asset Management likes three banks (Positive on Grupo Financiero Banorte, Akbank, Bradesco).
Commodities: Milk prices are set to rally next year, while cow herd size is set to drop and production with it, a problem that could take years to work out-but from which traders can still profit.
Streetwise: Few investors these days seem to like big pharma, keeping valuations relatively tame and creating an opportunity for investors (Positive on LLY, MRK, PFE).