Barrons weekend summary: cautious on food stocks
* Cover story: For big pharmaceutical companies struggling to produce drugs that are major breakthroughs in medicine, gene therapy—treatments designed to replace faulty genes with healthy ones—may be the “promised land”; The rich commercial potential of gene therapy has sparked a race among major players including Roche Holding, ONCE, NVS and SRPT; So far the FDA has approved only one gene therapy, but more treatments could pass muster in the coming years as clinical trials demonstrate positive results.
* Features: 1) Cautious on BGS, CPB, CAG, GIS, HSY, HRL, SJM, K, KHC, MKC, MDLZ: Food stocks can no longer be called defensive, as long as wild price swings abound and once-steady growth is disrupted by profound, durable changes in how consumers buy food—and all the major players face challenges on various fronts; 2) The new tax law eliminated personal exemptions for family members, abolished a range of deductions, and curtailed major tax breaks, imposing new caps on home mortgage interest and a $10,000 limit on deductions for state and local taxes—and an estimated 5% of taxpayers will still owe more in tax for 2018; 3) Women have long been at a disadvantage in retirement because they earn less than men, interrupt careers to raise children or care for parents, and live longer—but for single women, the situation is often worse, and their retirement savings tend to be lower than their married—and even widowed—peers.
* Tech Trader: Positive on Samsung, Huawei: Companies view foldable handsets “as the most significant change to the wireless industry since the first-ever smartphones” even as 5G technology is on the horizon; the devices are built on the view that a phone’s physical form is as important as the apps and software running on it.
* Trader: The market isn’t risk-free, says Hugo Rogers of Deltec International Group, who sees continued weakness in economic data from China and Europe, trade hopes baked into stocks, and very little earnings support for the stock market in the U.S.; Cautious on LB: Company may have begun the process of fixing what caused its stock to lose more than half its value in 2018, but investors shouldn’t expect the stock to go up anytime soon; Positive on LITE: Supplier of optical components that counts AAPL as a major customer has a bright future, and shares remain attractive despite weak iPhones sales, which led to a lower forecast in November.
* Interview: Pierre Ferragu of New Street Research Technology joined the firm last year so that he could “make connections and draw insights from disparate industry groups that can sometimes cause turf wars among analysts” (picks: ASML Holding, INTC, TSLA).
* Profile: Ed Perks, lead manager of the Franklin Income fund, a go-anywhere fund that looks across all asset classes to deliver steady income and capital appreciation (top 10 holdings: U.S. Treasuries, CYH, CHK, THC, JPM, WFC, Softbank Group, BAC, WTF, SO).
* Follow-Up: Cautious on GPS: A rally after the company’s announced it would spin off its Old Navy brand provides an opportunity for investors to take some money off the table because share may soon drift lower, but those with patience could see greater rewards.
* European Trader: Positive on RACE: “Recent improvements in the luxury-car maker’s operating performance will probably continue, the stock looks cheap, and the company just gave an optimistic outlook for this year.”
* Emerging Markets: Cautious on MA, AXP: Credit card giants have launched joint ventures in China, a difficult market for them to enter, but investors should “restrain expectations in a market where plastic is locked up by a state monopoly, and rapidly being superseded by mobile payments from online ecosystems” offered by BABA and Tencent.
* Commodities: “Gold prices have pulled back from a 10-month high in recent sessions, leaving investors wondering why the many geopolitical and economic issues plaguing the market haven’t been able to fully support the metal’s haven appeal.”
* Streetwise: WTW continues to try to reinvent itself, but investors should probably hold off buying shares, says columnist Jack Hough, because while some analysts see growth opportunities, others point to enough trouble spots to warrant concern. Related ( AXP CPB GIS CAG SJM MKC GPS K HSY WTW HRL MA BGS MDLZ KHC RACE RACE.IT )