Saturday, December 5, 2015

Barron's Saturday summary Barron's Saturday summary: Positive on AA; Cautious on KMI

Cover story: Barron's picks its 10 favorite stocks for 2016 (Positive on AMCX, AAPL, CELG, CVS, DAL, DFS, EA, FL, GM, MHK); Next year, the broad stock market is likely to do better than in 2015; "Assuming similar growth next year, with a steady price/earnings ratio and 2% in dividends, stock investors could end up with a total return in the high-single digits."

1) Cautious on KMI: Shares are down amid concerns the energy pipeline giant may have to cut its quarterly dividend of 51 cents to boost its leveraged balance sheet, a move that would be a major comedown;
2) Positive on AA: Shares took a hit following aluminum giant's announcement it would spin off value-added product divisions next year, but the market overreaction presents an opportunity to buy shares at a discount of more than 35% to intrinsic value;
3) Picks from investing professionals at this year's Sohn London conference (buy HMHC, MJN, Rolls Royce Holdings, TomTom International; sell ERIC, PFPT).

Tech Trader: Cautious on FIT: Maker of activity tracking bracelets "has red flags that make it a risky proposition," and a lockup expiration this month could dump more shares on the market if executives and early investors abandon ship.

Trader: "The market looks to be solidly inside the range it has inhabited all year, but the high number of huge daily moves this year and steadily weakening breadth suggest that all isn't as well as it looks"; Positive on MOS: The fertilizer sector has taken a hit, but company's valuation seems attractive, and a small rise in the global economy could revive shares; Positive on SKX: Shares are down, but the drop seems an overreaction to robust growth in the past few years, and the lower price offers investors a good entry point. Interview: Bob Michele of JPMorgan Asset Management is hedging currency exposure in much of his international portfolio and favors securities further out on the yield curve.

Profile: Stephen Peak, portfolio manager, Henderson European Focus fund, has guided it to returns of an average of 14% a year since its 2001 inception (top 10 holdings: BG, Nokia, ALU, ROG, AZN, TEVA, BAR, ASML, 7PI, NHH).

Follow-Up: To make China's currency more widely used, central banks, sovereign wealth funds, and private investors must stockpile more yuan assets as the country liberalizes its markets.

European Trader: Positive on Enel, LafargeHolcim: Companies are undervalued, but Katrina Dudley of the Franklin Mutual European fund says they are well-run cyclical businesses that have restructured and should benefit from a European recovery.

Asian Trader: Positive on LG Chem, Samsung SDI: Korean battery makers should gain as electric cars increasingly become mainstream, especially in countries such as China that are trying to curb pollution.

Emerging Markets: Things are looking bad in Greece, where stocks have fallen about 30% this year in what one observer calls a "dead market" that will have serious problems attracting investment.

Commodities: Heavy rains shortened the cotton-growing season and limited high-quality supply, making it one of the few commodities whose price gained in 2015.

Streetwise: Cautious on WLL: Shares have fallen 57% this year, but its bonds have held up, and shares could be worth acquiring because the company is cutting costs and will benefit when oil prices go up again.