Barrons weekend update: positive on CAG, BF.B, select REITs
Cover story: The current bull market has lasted seven years and pushed the market to new highs, but after faltering last May some bears wonder if the inevitable crash is just ahead; However, because stock valuations aren't too exuberant, the inflation-adjusted house price isn't above its previous peak, the yield curve isn't flat or inverted, and oil prices aren't surging to triple-digit peaks, investors can assume the bull market hasn't finished its run.
1) Positive on AVB, EQR, FRT, GGP, PSA: Story says these five REITs are worth a look for investors, noting such investments are less volatile than financials and have a lower correlation to the performance of the broader market;
2) Cautious on Brown Forman (BF.B): Shares have risen steadily and now sell for 27 times forward earnings estimates, but growth in a crowded market will be difficult, and any problems could lead to a drop in share price;
3) Positive on CAG: New chief executive Sean Connolly plans to trim down the company, boost margins, and improve quality, and shares could rise 30% if the efforts are successful;
4) Picks from the speakers at this year's London Value Investor Conference include companies whose attractions aren't apparent in their mostly beaten-down shares (Positive on Ryanair Holdings, easyJet, Elekta, PRGO, RBS, Ocado Group).
Tech Trader: Tiernan Ray says the "unfortunate theme" in the tech world during the past decade has been the massive number of layoffs that resulted from the launch and growth of disruptive industries such as cloud computing.
Trader: "Investors remain lukewarm on stocks, which still trade at above-average valuations despite weak quarterly earnings"; Positive on AMGN: Biotech's shares have trailed the market, but the company should get a boost if Repatha and AMG 334, now in phase 3 trials, are successful; A vote for the U.K. to remain in the European Union could boost stocks that have strong sales in the bloc, including PAG, PPL, PRAH, IVZ, XRX, F, CPRT, CBG, GWR, EBAY.
Alternative Investments: Andrew Lo, director of the Laboratory for Financial Engineering at MIT, talks about his work blending economics with behavioral finance and neuroscience and shares insight into the potential pitfalls of liquid alternatives.
Small Caps: Positive on JLL: The recent share selloff looks like an overreaction and an opportunity for investors, who have given short shrift to the company's less cyclical, annuity-like operations.
Follow-Up: Cautious on BABA: Barron's "remains wary of the shares of the complicated, opaque company," which could fall further as the SEC's investigation into its operation unfolds; Cautious on CSC: The stock got a boost on news of the HPE deal, but further upside appears unlikely given strong competition in the sector from the likes of AMZN; Cautious on INTC: Chip maker faces a threat from GOOGL's Tensor chip and the company's move into cloud computing, which could put a dent in Intel's lucrative server-chip business.
European Trader: Positive on BUD, SABMiller: Shares of brewing giants are set to rise now that the European Union has approved their merger, though authorities in the U.S., China, and South Africa remain undecided about the deal.
Asian Trader: Standard & Poor's is about to launch its index of China's 500 largest stocks; ICBC will partner with CS to offer an S&P China 500 exchange-traded fund, expected to launch in July.
Emerging Markets: A number of multinationals with operations in Venezuela-including KMB, PEP, MDLZ, Bridgestone Americas, F, PG, HAL, and SLB-are struggling against the country's steep inflation and currency controls.
Commodities: Cotton, which has been trading in the range of 60-65 cents a pound during most of the past two years, is likely to stay there for the time being.
Streetwise: The revolving door of chief executives of U.S. companies is more a reflection of market volatility than a struggling economy, and investors shouldn't draw broad conclusions about changes at the top.