Barrons Saturday summary: Positive on MAT, VALE, cruise stocks, and defensive energy names; Cautious on P and 3D printing
Cover story: Barrons looks at some of the best sector picks for 2016, noting that there are still plenty of places to find decent income in stock and bond markets, even with many key interest rates at or near historically low levels. Investors can get yields of 4% to 9% on a range of investments, including junk bonds, utility stocks, telecom shares, and real estate investment trusts.
Tech Trader: Companies such as AMZN, MSFT, and CRM revealed more about their cloud-based operations in 2015, but a number of questions remain, and as details emerge old-guard tech stocks such as ORCL, HPE, and CSCO could get a boost.
Trader: In 2015, moves among major global indexes and asset classes show U.S.-based investors who shorted oil and energy stocks or bought the dollar did well; Many prognosticators see a 10% rise in the market in 2016, though Barrons says its more likely to be flat to 5%; Positive on VALE: Company has taken a hit because of the plunge in iron-ore prices, but the stock could discount most of the headwinds, so that even small improvements could boost the shares.
Interview: Chris Hyzy, chief investment officer at Bank of America Global Wealth and Investment Management, says stocks could see a 7-8% return in 2016, and doesnt think a recession is imminent.
Profile: Brian McMahon and Vincent Walden, portfolio managers, Thornburg Global Opportunities fund, embrace an approach to investing that is both extremely flexible and extremely focused (top 10 holdings: LVLT, GOOGL, VER, MDLZ, TMUS, HP, C, ESRX, AAL, COF).
Features:
1) Positive on CCL, NCLH, RCL: Demand in the cruise industry is growing, especially from the fast-growing Chinese market, which coupled with low fuel prices and new ways to boost profitability bode well for shares in 2016;
2) Cautious on P: Internet radio company continues to feel pressure from companies such as Spotify, AAPL, MSFT, and GOOGL that offer streaming services; shares remain pricey even after a recent drop, and could fall by another 20%;
3) Cautious on ACAS, TICC, FSC: Business-development companies face pressure from activist investors to boost returns; American Capital, primarily owned by institutional investors, agreed to a potential breakup at the request of Elliott Management, which if successful could spur other firms to follow suit.
Follow-Up: Positive on MAT: Investors should keep their shares, because core brands are doing well, the dividend is strong, a new toy lineup should boost sales, and shares remain reasonably priced relative to potential earnings; Cautious on DDD, SSYS: Shares of 3-D printing companies could fall further amid growing competition and questions about the market potential in this sector.
European Trader: Positive on Akzo Nobel: Shares of paint and coatings maker could climb by as much as 20% during the next 12 months following a restructuring and cost-cutting.
Asian Trader: Asian equity strategists think Indonesia will have a good year, though improvement may not be evident until the second half (positive on Pembangunan Perumahan, Jasa Marga Persero, Bank Mandiri).
Emerging Markets: Africas two biggest economies, South Africa and Nigeria, face different challenges in 2016, but both need to reform financial policies.
Commodities: Gold shares are down, creating a potential draw for investors, but the precious metal could continue to be a losing bet in 2016 amid an ongoing downturn in raw-materials prices.
Streetwise: Positive on CVX, OXY, DVN, NBL, NBR, PTEN: Companies are among those in JPMs Defensive Energy Basket, which focuses on firms that have stronger balance sheets, better asset quality, and lower costs
