Barrons Saturday summary: Positive on GOOGL, FB, AMZN, NFLX, SIG, BLX, SALE, and some energy names; Cautious on POST, EEM, FNMA, FMCC
Cover story: GOOGL's YouTube may be more valuable than NFLX; Investors should look at it for three reasons:
1) YouTube is growing at an astonishing pace, with viewing time up 60% and mobile viewing doubling year over year, posing a major threat to traditional TV;
2) It has 15 times as many viewers at Netflix, and money is following them; revenue per average viewer could double in five years;
3) Alphabet is returning cash to stockholders and buying back shares.
Tech Trader: Positive on FB, AMZN, NFLX, GOOGL: So-called FANG companies will likely continue to prosper in 2016 as they generate better-than-average growth and prove they are in for the long haul; the companies will benefit from a winding-down of private-market investment in private companies with huge valuations, such as Uber.
Trader: Market breadth improved as investors went for oversold stocks, a positive sign since equity gains have been concentrated this year in a handful of mostly tech stocks that have risen by double and triple digits; A look ahead at 2016, which should see some small growth for S&P 500 companies, though revenue growth may be hard to find, while the biggest risk to stocks may be geopolitical; When choosing sectors for the new year, says Sam Stovall of S&P Capital IQ, "history shows you are better off owning the three best sectors of the previous year."
Interview: Harvard history professor Niall Ferguson sees more trouble ahead for Europe, China-whose attempt to move to a true market economy will probably fail-and Saudi Arabia, which could see the kind of destabilization Iran did in the 70s; however, countries with cheap stocks and political stability could beckon investors.
1) Positive on SIG: Mainstream jeweler, parent of brands including Jared, Kay Jewelers, and Zale Corp., is increasing market share with aggressive ad campaigns, and it hasn't been hit by the strong dollar the way upscale firms such as TIF have;
2) Positive on VLO, TSO, SCTY, FSLR, OXY, EOG, VNQ; Cautious on FNMA, FMCC: Energy companies will benefit from the new government budget deal and could see shares climb through 2018, while the mortgage giants will see no relief;
3) Positive on BLX: Firm's Scientific Active Equity group's ability to collect and analyze data has given rise to new a kind of fundamental investing based detailed analysis of big data.
Small Caps: Cautious on POST: Cereal giant has been acquiring packaged-food companies and has largely avoided the downward trend in small-cap stocks, but its rich valuation and challenging environment mean investors should consider taking profits now.
European Trader: "Hopes are high for European equities in 2016, as favorable conditions point toward outperformance. But picking the right stocks will be more important than ever" (Positive on LYG, ING, Commerzbank, Societe Generale, RDSB, Repsol).
Asian Trader: "Asia looks at least as tough next year as in 2015, with little growth and a smoggy outlook. But currency investors can get double-digit returns by buying yen and selling yuan" (Positive on Mitsubishi Estate, Mitsui Fudosan; Cautious on Nikon, SoftBank).
Emerging Markets: Emerging markets should see a slow and tortuous recovery next year, with companies that undergo structural reform likely to have winning stock markets.
Commodities: Precious and industrial metals should keep falling in 2016 because of rising global supply, weaker demand in China, and a stronger dollar, and the overall commodity sector will remain troubled.
Streetwise: Positive on SALE: Shares of online coupon marketplace-which hasn't met investors expectations-are cheap, and investors will benefit even if the company moves "from bad to average."