Barrons weekend summary: Positive on FDX, ILMN
Cover story: Barron's list of the 30 best chief executives includes the leaders of the tech sector's FANG group-FB, AMZN, NFLX, and GOOGL-but not AAPL chief Tim Cook, who is struggling to create the next big hit at the company; New to the list this year are Mark Parker of NKE and Brian Roberts of Comcast, while financial titans Jamie Dimon of JPM, Warren Buffett of Berkshire Hathaway, and Laurence Fink of BLK are among those returning.
1) Fidelity tops Barron's 2016 survey of best online brokers, followed by Interactive Brokers, OptionsHouse, AMTD, and TradeStation;
2) Positive on FDX: Fears about growing competition from AMZN are likely misplaced, as are key-customer concerns, and the share price could rise 15-20% during the next year;
3) Positive on ILMN: Company's share took a hit amid the overall collapse of biotech and healthcare stocks, but the gene-sequencing company-which dominates its market-should rebound with solid revenue and earnings growth;
4) Positive on Smurfit Kappa Group: Irish packaging company's shares could see a 40% boost in the next 12 months if performance continues to improve following its debut on the London Stock Exchange;
5) Profiles of the 30 global leaders who made Barron's list of the World's Best CEOs.
Tech Trader: Cautious on TWTR: Shares are down 27% this year and 64% during the past 12 months, a sign founder Jack Dorsey's return as CEO hasn't helped; Though Twitter has a massive audience, Wall Street thinks it isn't "mainstream," but may eventually have to accept that it's best seen as a strong niche player.
Trader: "The market's valuation, at 17 times consensus analyst earnings-per-share estimates for 2016, looks stretched again, given that easy monetary policy and rising oil prices-not earnings growth-are responsible"; Determining whether there's any value left in VRX's assets will take time, but for now "it remains an uninvestible trap with too many unknowns"; David Zion of CS says companies in the S&P 500, excluding financials, hold at least $750B in cash overseas, up from $690B a year ago-and for some firms, the money is a significant part of their market cap. Interview: Joel Tillinghast, portfolio manager, Fidelity Low-Priced Stock fund, buys only stocks priced less than $35 and looks for a highly visible discount to fair value (picks: ANTM, KEYS, BBBY).
Profile: Anne Walsh, chief investment officer at Guggenheim and co-manager of the Guggenheim Total Return Bond fund, seeks to minimize the effects of behavioral biases (top ten holdings: asset-backed securities, non-agency MBS, U.S. Treasuries & Agencies, high-yield corporate bonds, investment grade corporate bonds, bank loans, commercial MBS, preferred securities, municipal bonds, military housing bonds).
Follow-Up: Cautious on TSN: Company's move into prepared foods lifted shares by 66%, and there is more growth in store, but the stock's valuation is high, and investors may want to take their profits.
European Trader: Positive on NN Group: Insurer and asset manager "could offer investors a degree of protection in today's challenging markets. Its shares look cheap despite solid fundamentals, and they could climb 20% or more in the next 12 months."
Asian Trader: Despite criticism from abroad, the Bank of Japan's negative rates haven't stalled the yen, which has gained on the dollar, but that strength undercuts consumer confidence.
Emerging Markets: A weak dollar might help Brazil, but it needs domestic infrastructure projects, which are unlikely to come because of the country's debt burden and political morass.
Commodities: "Copper prices are heating up after a long downturn," but investors should be wary because the rally is being driven more by market momentum than fundamentals.
Streetwise: GS strategist David Kostin added BMY, NKE, and SHW to his basked of strong-balance-sheet stocks; REGN, which is also on the list, has taken a hit this year, but investors should focus on its pipeline.