Barrons weekend summary: Positive on BMY, CELG, HEI, AABA ; Cautious on NVDA, INTC, IRBT, TXN, Central Banks & Bitcoin
* Cover story: Cryptocurrencies such as Bitcoin are thriving despite the fact they are barely recognized by the SEC; “Even if Bitcoin ultimately falls apart or crashes, its underlying technology—known as ‘blockchain’—is likely to disrupt financial markets for years to come”;
* Tech Trader: Cautious on INTC, NVDA: A revolution in the chip industry could upend established players as companies such as GOOGL, which have never been involved in semiconductors, become their own chip houses and numerous startups bring fresh competition.
* Trader: After leading the market higher this year, tech stocks are slowing down, but that doesn’t mean the Nasdaq’s rally is over; The acquisition of SPLS by private equity firm Sycamore Partners won’t put an end to troubles in the retail sector; Cautious on IRBT: Company faces headwinds from rivals Ecovacs and SharkNinja, and shares could fall to a multiple more in line with other appliance vendors.
* Profile: Christopher Beck of the Delaware Small Cap Value fund focuses on cash flow and capital spending and is leery of companies with too much debt (top 10 holdings: EWBC, BERY, MTZ, SNPS, SIGI, HBHC, WBS, OLN, TSE, FUL).
* Interview: Evan Lorenz of Grant’s Interest Rate Observer says he isn’t finding as many cheap, defensible longs with good balance sheets that the publication can recommend (pick: Fibra Uno; pans: KHC, WHR, Canadian Apartment).
* Features: 1) Bitcoins are a speculative investment, and there are number of ways to invest in them, though no U.S. exchange-traded funds track them; Michael Novogratz, formerly of Fortress Investment Group, says the market cap could reach $5T in five years, up from $42B today; 2) Positive on BMY: Shares of company are down on disappointing trials, but investors are ignoring lucrative potential markets, and the shares could return 25-40% during the next two to three years; 3) Cautious on TXN: Though the stock’s price/earnings ratio remains near a historical average, shares are up 25% and could rise another 20% or more based on strong margins, high cash flow, and dominant market positions; 4) The cable and wireless sectors are likely to see a round of dealmaking among all but market leaders Comcast and CHTR, and one or more cross-industry combinations appear likely.
* Small Caps: Positive on HEI: Company that provides replacement parts for the airline industry has thrived for more than 50 years, and its earnings and stock price should compound at a mid-teens rate in coming years.
* Follow-Up: Positive on CELG: Pharma sees the potential for $21B in yearly revenue, nearly double what it booked last year, if results from 17 late-stage trials are positive; Positive on AABA: Shares trade at a 30% discount to the value of the company’s assets, and investors could benefit from catalysts such as tax reform or aggressive share repurchases.
* European Trader: Positive on Sanne Group: Fund-administration outsourcing firm is tapping into the lucrative market of managing the myriad regulatory demands faby financial services companies.
* Asian Trader: Beijing’s move to open the Shanghai and Shenzhen stock connect platforms has undercut Hong Kong’s big selling point as an intermediary for foreign investors in China.
* Emerging Markets: “Emerging market debt, which boasts an average yield of about 6%, has had record inflows and healthy returns this year,” and the trend is likely to continue over the next seven years.
* Commodities: Some market pundits think a falling dollar and global political turmoil could give gold a boost in the second half of the year.
* Streetwise: Story says the era of extraordinary central bank support—the result of which is record-high stock and bond prices, but modest economic growth—may be about to end.