Sunday, February 21, 2016

Barron's Saturday summary: Positive on LGF, SYF, PDCO 

Cover story: The economy is in a growth pause, not the pause before the onset of recession; Favorable fundamentals at this stage in the expansion should dominate, with economic growth running at an annual rate of 2.8% through the first half and 3.2% by the second half. 

Tech Trader: Cable companies are worried about a potential FCC plan to unlock cable boxes, allowing viewers to use devices from other companies to watch TV; Comcast has worked hard to improve its set-top box, and it thinks few of its customers would use third-party devices. 

Trader: Bernie McGinn of McGinn Investment Management says that for the stock market to regain its equipoise, energy and financial stocks need to show strength; Positive on LGF: Many of the studios problems appear to be discounted in the stock price, and shares could rise 50% during the next 24 months just by returning to form; Ned Davis Research says investors should seek out GARP, or stocks offering growth at a reasonable price; among companies meeting the criteria are MOH, WEX, SOHU, AMG, OMF, AAPL, GILD, ESRX, HCA, VMW. 

Interview: Donn Vickrey and Herb Greenberg of Pacific Square Research make a bearish case for BABA, Home Capital Group, and SIG. 

Profile: Neil Hennessy and Brian Peery, portfolio managers, Hennessy Cornerstone Mid Cap 30, discuss their focus on mid-caps that are large enough to weather economic downturns and small enough to be strategically nimble; firm has outpaced 86% of its peers during the past decade (top 10 holdings: CASY, W, SBGI, SNX, HA, INGR, ATO, NVR, OMI, IPG). 

1) Positive on SYF: Company has gained 12 points of market share since 2004; shares are down 17% in the past year, but that appears overdone, and they could rise 40% as steady loan growth boosts the P/E multiple; 
2) Austin, Texas-based Hoisington Investment Management has ridden the secular decline in government bond rates and the handsome concomitant rise in bond prices to annual compounded returns of 7.9%; 
3) Positive on LafargeHolcim: Stock price is down amid disappointing earnings and worries about the global economy, but the selloff seems overdone, and shares are likely to rise this year as new opportunities extend the brand. 

Small Caps: Positive on PDCO: Global distributor of dental and veterinary products has simplified operations, and shares are inexpensive for a market leader. 

Follow Up: The year is only two months old, and high volatility and a punishing stock market correction have already taken a painful toll on the most recent predictions made by strategists in Barrons annual market outlook; Positive on AMD: Chip designer should have better days ahead as it launches new high-end desktop chips and moves into the server sector. 

European Trader: Positive on Exor: Italian financial holding company whose assets including FCAU, RACE, and CNHIis a good way to by those companies at a discount. 

Asian Trader: As Chinas bad debt reaches levels not seen in a decade, investors are pondering a crucial question: Do Chinas commercial banks have enough of a capital cushion to absorb all those delinquent loans? 

Emerging Markets: Katie Koch of Goldman Sachs Asset Management says Indias real GDP growth could move from about 7.5% today to 10% within the next several years, but the benefit of the uptick wont be reflected in funds that buy GEMAX. 

Commodities: Gold has defied naysayers with a sharp rally, but the jury is still out on whether the gains will last.