Saturday, January 9, 2016

Barrons Saturday summary: positive on HBI, DECK

Cover story: Despite turmoil in the market at the beginning of the year, "it's probably too early to call an end to the bull run"; the U.S. economy remains healthy and global stocks still look like the best major asset class.

1) Positive on HBI: Despite a drop in the share price, apparel maker has been able to withstand difficulties in its sector, and its Champion brand is thriving; company compares well to peers such as COLM, NKE, UA, and VFC on valuation and profit margins should rise;
2) Asia faces a number of potential problems in the coming year, including instability in Beijing, terrorist mayhem, a Japanese debt crash, and territorial disputes in the South China Sea;
3) Positive on DECK: Shares have fallen because of slower-than-usual winter sales, but company is moving goods faster than rivals and launching new products; shares could trade up to $65 in the next year from a current $45.

Tech Trader: Positive on AMZN, GOOGL, FB, MSFT, BIDU: Though a host of new companies are sprouting up to leverage the Internet of Things, the companies that have the most to gain are cloud providers, which will serve as hubs and data collectors; Cautious on AAPL: The recent "quixotic trading pattern" affecting the company's stock is likely to persist indefinitely because of concerns about the iPhone, but it's not cause for worry.

Trader: In China, the correction and continuing improvement in employment suggest consumer stocks could be an opportunity, says Michael Yoshikami of Destination Wealth Management; +/- UPS: Though the delivery giant faces several challenges, the company is a good play "for a long-term-oriented investor wanting a robust, income-generating company"; Cautious on CMG: News at the food chain keeps getting worse, but the company has other issues beyond the recent foodborne illness outbreaks, including a problematic supply chain.

Interview: John Dowd, manager of the $2B Fidelity Select Energy Portfolio, sees strength in the energy sector ahead, though timing remains an open question (top 10 holdings: XOM, SLB, EOG, VLD, CVX, XEC, NFX, PXD, BHI, FANG).

Small Caps: Barron's looks back at its small-cap picks last year, noting that REMY, TOWN, POST, ELY, and BNCL were the best performers, while LXU, FOR, ESL, FLWS, and OI were the worst.

Mutual Fund Quarterly: Profile of fund managers who have beaten the S&P 500 in multiple time periods; A look at how mutual funds should handle illiquid investments; Value-oriented stock funds took a hit from falling oil prices in the fourth quarter; "Guggenheim and iShares offer ETFs that can be used to create a bond ladder-a benefit for many investors, but higher costs and structural issues can be a drag on performance."

European Trader: Positive on Dassault Aviation: French aircraft company should do well in 2016-it has a healthy backlog of orders and production of its Rafale fighter aircraft should increase.

Asian Trader: The worst may be yet to come for the Chinese stock market as company insiders begin to sell shares; investors should also be wary of buying the rest of emerging markets.

Emerging Markets: India remains strong, with a solid backbone, and investors are likely to benefit if prime minister Narendra Modi's reforms materialize; IBN and HDB look attractive, as does SMIN.

Commodities: "Analysts are now divided on whether the demand gains for gasoline will be repeated this year."

CEO Spotlight: Martin Gilbert, co-founder and chief executive of Aberdeen Asset Management, has rebuilt the firm's platform, boosted assets under management, and used acquisitions to add new products and markets.

Streetwise: With earnings season about to start, investors are worried that corporate profits will disappoint, but Thomas Lee of Fundstrat says that may not be the case.