Barron’s Weekend Summary: KO’s global reach leaves it will positioned for a rebound next year when the pandemic resides; Investors remain unfazed by Washington’s regulatory assault on tech giants
* Cover Story: Positive on KO: The beverage giant has taken a hit from the pandemic, but with operations in more than 200 countries, it has global reach like no other consumer company, and it benefits from rising living standards around the world while providing exposure to a weaker dollar because it generates about 75 percent of its profits outside the US; When the pandemic resides and the world starts to return to normal in 2021, Coca-Cola is well poised for a rebound.
* Tech Trader: Positive on AAPL, AMZN, FB, GOOGL: Tech giants face a growing regulatory assault from Washington related to antitrust, with a federal lawsuit against Google the latest push, yet investors seem indifferent to the growing assault, either because they believe it’s merely chest-thumping, or because they think a forced breakup of tech giants would create value.
* Trader: Fundamentals suggest that bond yields should be much higher—Ed Yardeni, chief investment strategist at Yardeni Research, argues that the current copper-to-gold ratio implies a 10-year Treasury yield near 1.61 percent; Positive on SFM: Only a few of the analysts that cover the stock, which has dropped during the pandemic, are bullish, but there are trends working in the company’s favor, such as the ongoing eat-at-home and healthy eating trends.
* Interview: Cathie Wood, an economic at ARK Investment Management—which is solely focused on disruptive innovation—is bullish on TSLA and Bitcoin; She discusses innovation and destruction in a post-Covid world, a new golden age for healthcare, technologies such as robotics and 3D printing, and favorite stocks, including NKLA.
* Profile: David Wallack, manager of the $11.5B T. Rowe Price Mid-Cap Value fund, which until recently had been closed to new investors, doesn’t try to predict the future—instead, he runs base-case scenarios and models the upside and downside, narrowing selections by which opportunities offer the best reward for the risk.
* Features: 1) Democratic presidential candidate Joe Biden’s critics say his plan to raise taxes on the wealthy and on corporations would lead to economic devastation, but the proposals—when analyzed independently of spending and economic policies—would only generate negative economic growth of 0.16 to 1.62 percent over the next 10 years; related story breaks down how much various groups would pay under Biden’s and Trump’s tax plans, focusing on top earners, middle-income earners, investors, and benefactors and heirs; 2) Positive on BABA, China Tourism Group Duty Free, HTHT, Innovent Biologics, Jiangsu Hengrui Medicine, Magazine Luiza, MELI, Nari Technology, Reliance Industries: After underperforming the US for a decade, emerging markets face an improving backdrop—more fiscal stimulus and a global recovery from the pandemic, and a weaker dollar that makes foreign assets cheaper for US investors, should help emerging market stocks rival US tech giants; 3) Positive: CHCT, DOC, HR: With health services returning to normal, demand for medical real estate is holding steady—landlords say rents are being collected at nearly 100 percent of pre-Covid-19 levels, acquisitions are ramping up, and interest rates remain low, all of which should fuel dividend and asset growth.
* European Trader: Positive on HelloFresh: Shares of the German meal-kit company are up as it benefits from consumers seeking to cook at home during lockdowns, and with the meal-kit market set to grow by 15 percent in the coming years, the stock has more upside as the company increases capacity in the US.
* Emerging Markets: Investors aren’t overly concerned about the recent political turmoil in Thailand, where protesters are demanding the government’s resignation and curbs on its monarchy—after shaking world markets in 1998, “the country of 70 million has become a financial afterthought, accounting for just two percent of global emerging market indices.”
* Commodities: “The diesel market serves as a barometer for the state of the economy because the fuel is widely used in the transportation industry, and the signals it’s giving off in terms of supply, demand, and prices don’t point to a very promising future.”
* Streetwise: With M down 56 percent so far this year, JWN down 65 percent, and KSS down 52 percent, investors should consider dumping shares of the struggling retailers by Thanksgiving if they expect a year-end rush for tax selling, says columnist Jack Hough—because shopping trends might look good around then but could be much worse later.