Barron’s weekend summary: positive on AKAM, SWK, GM, F, DD, WTW; cautious on BBRY, AAPL
Cover story: Barrons Roundtable, Part 3 offers picks from Mario Gabelli (JRN, DBD, CHMT, NFG, WFT, POST), Brian Rogers (AMAT, CNX, CVC, ETR, NEM, PRMSX), Fred Hickey (CEF, AEM, GG, GDXJ, CCJ), and Scott Black (ESRX, ACT, BCEI, KLAC, SNDK).
Features:
1) Positive on AKAM: Company handles up to 30% of the worlds Internet traffic with it servers, providing a growing revenue stream, which along with strong profit margins could lead shares to climb 25%.
2) Positive on SWK: Company has disappointed in wake of Niscayah acquisition, but as it better integrates the Swedish company and makes gains from housing recovery, shares could rise 20%.
3) Positive on GM, F: Both automakers have bounced back from their pre-recession troubles, and shares trade at humble levels, with Ford being the stronger company in the long run but General Motors the better bet for 2014.
Tech Trader: Positive on ERIC, NOK, ALU, JDSU: Companies should see a boost this year from increased construction of telecom infrastructure in places such as China, which is starting a significant build-out of its 4G broadband wireless networks; Cautious on AAPL: Company continues to deliver tremendous free cash flow, but its revenue growth will not likely return to double digits, and until new product categories emerge, investors may be stuck with an also-ran stock multiple.
Trader: Some observers say emerging-market issues arent material enough to U.S. equities to justify more than a correction; Positive on DD: Company has a strong balance sheet and a long track record of growth, and is big and diversified enough to outperform should market turmoil continue; Cautious on BBBY: Companys shares are down after missing earnings expectations and a slow January, drop could make current share price a relatively cheap entry point, since by almost any metric the shares are trading at a significant discount to historical levels.
Follow-Up: Cautious on Lenovo: Deals for IBM server business and Motorola account for almost 40% of companys market value, and will dilute existing shareholders by as much as 8%, while Motorola will require a significant overhaul and spread management capacity thin; Positive on ECPG: Companys low-cost, India-based systems and staff give it big edge in the U.S., and it continues to reward shareholders.
Small Caps: Positive on WTW: New chief executive James Chambers has a turnaround plan that could reverse companys fortunes and send the stock significantly higher, part of which includes effort to convince companies that using its system can drive down their healthcare costs.
Mutual Funds: Interview with Marc Tommasi, Head of Global Investment Strategy, Manning & Napier, who favors consumer-driven emerging market plays but worries about rising U.S. rates (picks: Tesco, SLB, Talisman Energy, Accor, British Sky Broadcasting, Encana, Carrefour, Cameco, Fanuc, Nestle).
European Trader: Positive on ERIC: Multiyear agreement with Samsung could help companys shares add 25% in value in the next 12 months as it faces an improving environment for capital expenditures, possibility of industry consolidation, and prospects of fatter profit margins.
Asian Trader: Unlike most of their Asian counterparts, Vietnamese stocks are expected to extend last years strong performance through 2014. Emerging Markets: The Feds easy money policy covered up the fact that many emerging markets were spending more than they earned, building large current-account deficits.
Commodities Corner: With supplies of Arabica coffee beans so plentiful that they dont cost much more than lower-grade robusta beans, roasters are more likely to seek out the former.
Streetwise: New jobs are popping up because of technology, but they arent as plentiful as those that originally helped build Americas middle class; market observers are watching for more consumer spending or for Chinese output to rev up.