Barron’s Weekend Summary: Barron’s featured a second 2022 Roundtable installment. David Giroux of T. Rowe Price highlights six stocks that, to his mind, have been unfairly punished.
Cover Story:
-This week, Barron’s features a second 2022 Roundtable installment. David Giroux of T. Rowe Price highlights six stocks that, to his mind, have been unfairly punished. He’s joined by Gamco’s Mario Gabelli, Henry Ellenbogen of Durable Capital, and Abby Joseph Cohen, formerly of Goldman Sachs and now a professor of business at Columbia University’s Graduate School of Business, all of whom present their own best bets for the year ahead.
Tech Trader:
-Eric Savitz has been bullish on Netflix. Despite last week’s collapse over lower than expected subscription numbers, Savitz writes that “it seems a little late in the game to turn bearish now. Over the past two years, Netflix has still added nearly 55 million subscribers, increasing the total by nearly 33%. The company has said it expects to be profitable this year and going forward, and that it plans to be back in the market, repurchasing stock before long.”
The Trader:
-There are reasons to remain optimistic about stock performance despite the recent slide. Fundstrat global portfolio strategy head Brian Rauscher notes that rising inflation has been one of the biggest factors in the market’s decline this year, so a reversal would be a tailwind for stocks. And that’s just what he thinks will happen. “Inflation is going to peak and roll over during [the first half of] 2022,” he says. He recommends that investors play offense by buying sectors like technology, consumer discretionary, financials, and energy.
-A bad start to 2022 just got a whole lot worse. The Dow Jones Industrial Average declined 1646.44 points, or 4.6%, this past week. That looked stellar next to the S&P 500, which fell 5.7%, and the Nasdaq Composite, which dropped 7.6% and is now down 14% from its all-time high, hit back in November. All three suffered their worst weeks since 2020.
Features:
-Economist Wade Pfau has been thinking about retirement since he was in 20s. But not just his own retirement. Pfau started studying Social Security for his dissertation while getting his Ph.D. at Princeton University in the early 2000s. At the time, Republicans wanted to divert part of the Social Security payroll tax into a 401(k)-style savings plan. Pfau concluded it might supply sufficient retirement income for retirees—but only if markets cooperated.
-Activist hedge fund Starboard Value is behind a group that made a $9 billion bid for department-store operator Kohl’s , according to a report.
The bidding group is led by Starboard-backed Acacia Research, which told Kohl’s that it was assured by bankers that it could get financing for a bid that values the retailer at $64 per share, The Wall Street Journal reported. Kohl’s shares recently traded around $47 apiece.
-The Fed outlined its thinking on a central bank digital currency, or CBDC, in a highly anticipated report on Thursday. While the report doesn’t make policy recommendations, it lays out a blueprint for transforming the dollar into a digital asset. The report also requests public comment on a CBDC and says that the Fed won’t proceed without “clear support” from the White House and Congress, ideally in the form of legislation.
European Trader:
-The world’s largest shipping container company, A.P. Møller-Maersk A/S, has been carting ocean freight for more than 100 years. The company was a big winner in 2021, as world economies ramped up production when pandemic restrictions were lifted. Now, Maersk is expanding to include road, rail, and air services that are connected by a high-tech platform with real-time tracking information. The shift could help power Maersk’s shares higher.
Emerging Markets:
-Overall, the damage to emerging market stocks has been significant over the past 12 months. The iShares MSCI Emerging Markets Exchange-Traded Fund (EEM) has dived 12.4% in the past year, compared with the S&P 500‘s 15.3% rise over the same span. That economic picture could change, however, as China’s central bank takes measure to spur economic growth.
- China’s export machine is in strong longer-term health, though, and evolving. Labor-intensive, low-margin apparel is down to 5% of exports. The dominant categories are phones, computers and integrated circuits. A next technological generation—electric vehicle batteries, medical devices, pharmaceuticals—is gathering momentum fast.
Commodities:
-Last winter, natural-gas shortages sent short-term prices rising in Europe and Asia, lifting stocks of gas producers like EQT and Range Resources . This year, energy consultant Wood Mackenzie is predicting that high overseas demand will continue, as gas buyers rush to lock in longer-term contracts at higher prices. That has benefited Cheniere Energy, the largest U.S. producer of liquefied natural gas, or LNG.
Streetwise:
Jack Hough suggests investing in good old-fashioned oil. “The new darling of Wall Street isn’t into robocars, crypto mining, or the metaverse. It’s an Oklahoma City oil driller with a favorable position in West Texas shale. Devon Energy stock has returned 181% in a year, making it the single best performer in the S&P 500. You couldn’t script a bigger turn of events on Netflix—whose 20% plunge on Friday, by the way, makes it one of the index’s worst three-month performers.