Saturday, June 18, 2016

Barrons weekend summary

Barrons weekend summary: positive on CELG, DLPH; Cautious on SQ 
Cover story: A look at the best watches of 2016, which must be new models and house a mechanical movement made either in-house or exclusively for the brand; The list is topped by the Patek Philippe World Time Chronograph, which costs $73,700. 

1) "Based on valuations and dividend yields, foreign stocks look more attractive than their U.S. counterparts," and they could rally if the U.K decides to remain in the European Union; 
2) Positive on CELG: Company may depend on a single drug, Revlimid, but demand is rising and it has about a decade of remaining patent protection, including promise in combination therapies; 
3) Cautious on SQ: Silicon Valley unicorn is at least a year away from making a profit, and the recent expiration of a lockup of more than 250M shares means there's a huge overhang of stock and a sizable short position; 
4) Positive on DLPH: "Investor concerns about peaking vehicle sales in the U.S. and China have created an attractive opportunity to buy Delphi stock at multiples well below the company's expected earnings growth rate."

Tech Trader: Cautious on MSFT: Though the price Microsoft is paying for LNKD isn't expensive, it's still worth asking why the tech giant agreed to add a 50% premium to LinkedIn's share price; There is probably some wishful thinking on chief Satya Nadella's part that should give investors pause in light of past Microsoft deals. 

Trader: Although a potential Brexit appears to be holding U.S. stocks hostage, Aaron Clark of GW&K Investment Management says an EU exit may already be priced in; Positive on BAC: Shares appear cheap, creating a good entry point for investors, who could see a 20% or more gain once the bank gets past current problems; another potential plus is the sale or spinoff of Merrill Lynch; Cautious on WTR: Company's stock now trades near levels that previously preceded steep declines, a sign its recent run may be mostly over. 

Profile: Jamie Wilhelm, manager of Touchstone Focused fund and a follower of Warren Buffet's investment philosophy, seeks to find businesses that have a significant and sustainable competitive advantage, then buy when shares fall below intrinsic value (top 10 holdings: Berkshire Hathaway, BK, MDLZ, AMZN, SYY, NVS, GE, AAPL, ORCL, CSCO). 

Interview: Russell Napier, publisher of the global macroeconomic and strategy report "The Solid Ground," shares his views on the Brexit referendum. 

Follow-Up: Barron's debunks some of writer Michael Lewis' claims in "Flash Boys," finding that he and many proponents of IEX conflated legitimate concerns about computer front-running with a broader fear that small retail traders were getting nicked; Cautious on OPK: Shares are down as investors continue to question the acquisition of Bio-Reference Laboratories; the combined company remains unprofitable and its market valuation too high. 

European Trader: Positive on Adidas, Roche: Companies "are all-weather businesses with strong balance sheets that generate plenty of cash," and should continue to provide solid returns regardless of how the Brexit vote plays out. 

Asian Trader: Story on how a Brexit would affect Asia notes that the region has the advantage of distance, and that not many Asian companies to sell to Britain. 

Emerging Markets: Observers expect Turkey's real GDP to expand by about 3.5% this year, which is partly why foreign investors don't seem overly concerned about the country's geopolitical problems. 

Commodities: Hog prices have soared on demand from China, but experts say the market is getting top-heavy, and that making a case for future gains is difficult. 

CEO Spotlight: Profile of HSIC chief executive Stanley Bergman, who has built a multinational distributor of dental, veterinary, and medical products with investment returns twice those of Berkshire Hathaway. 

Streetwise: Positive on NFLX, NKE, DE, ESRX, QCOM should start to benefit from the reversal of a trend in which the most labor-intensive companies outperformed the lest labor-intensive ones; Cautious on SYF, DFS, AXP, COF: Earnings for the consumer-finance industry have plateaued, and the trend isn't likely to change soon.