Barrons weekend update: Positive on OAK, WFM; cautious on CAB
Cover story: Private tech companies such as Uber, Dropbox, and Airbnb have legitimate business models that are disrupting mature markets; venture capitalists are funding them, but investors aren't showing much interest, creating a major lull in initial public offerings-but the bad news for IPOs could be a bullish sign for the market.
1) Female financial advisors face a number of challenges, and "remain a distinct minority in an industry many view as especially well-suited for them";
2) Positive on WFM: Shares of market chain have strong potential for upside as it cuts costs, offers more competitive pricing, and launches a value chain that could open up new markets;
3) Positive on OAK: Shares have gone down since February, but if new initiatives led by chief executive Jay Wintrob bear fruit, they are likely to head back to the $60 range from today's $45;
4) Cautious on CAB: Shares have climbed to $52 from $33 since October after Elliott Management took a stake, but the retailer still faces many challenges, and investors should consider taking their profits now;
5) Positive on JNJ: Company tops Barron's annual ranking of the world's most respected companies, displacing AAPL, which dropped to No. 3, while Berkshire Hathaway holds the second spot.
Tech Trader: Positive on GOOGL, AMZN: Companies are starting to look like INTC and MSFT at the end of the 90s: they're focused less on constant disruption and more on strong products that allow them to thrive and provide investors with healthy returns.
Trader: Jim Bianco of Chicago-based Bianco Research is on high alert for "giant asymmetric risk," and is concerned that after the jobs report, markets put the probability of a rate hike at 4%; +/- KORS: Investors have turned the beaten-down stock into a star performer, but they're clearly looking beyond the gloomy outlook for the current quarter; Positive on ATSG: Company's relationships with AMZN and DHL are giving it a boost, and shares could see 43% gain during the next 12 months.
Advisor Rankings: Kimberlee Orth of Ameriprise Financial, Shannon Eusey of Beacon Pointe Advisors, and Stephanie Stiefel of Neuberger Berman hold the top three spots on Barron's list of the Top 100 Women Financial Advisors.Interview: Ivy Zelman of Zelman & Associates, one of the few analysts who predicted the housing crash, is bullish on the sector, though she is wary of the real estate markets in New York and Miami.
Profile: Michael Cornelius, manager of the T. Rowe Price Emerging Markets Bond fund, takes a contrarian approach, aiming to minimize risk despite a preference for second-tier and frontier countries (top 10 country exposure: Mexico, Brazil, Argentina, Indonesia, Russia, Venezuela, Turkey, Ukraine, South Africa, Serbia).
Small Caps: Positive on HMHC: Textbook and educational-content firm is a market leader in a sector with high barriers to entry; despite a weakening sector, company stands to benefit from the growth of its digital business; Cautious on MPW: REIT invests only in acute-care hospitals, giving it a competitive advantage, but investors may want to pare holdings after a boost following the sale of an equity stake in Capella Healthcare.
Follow-Up: Cautious on MON: Bayer is unlikely to come up with the capital to entice the company into a deal; shares are up, but its growth prospects have eroded and investors should take their profits.
International Trader: Should the U.K. vote to leave the European Union, "it could take two years of negotiations to untangle the country from the EU apparatus, but the impact could be more immediate," including a steep drop in sterling.
Asian Trader: Overview of the Sohn Conference Hong Kon; speaker Yuet Wei Wan of Wei Capital Management said supply and demand for oil is pretty balanced at recent levels, though disruptions in places like Nigeria could tip the markets into deficit.
Emerging Markets: With the Federal Reserve preparing to raise rates, investors may find opportunities in Pakistan, India, and Romania, as well as central and eastern Europe; caution is warranted in Argentina.
Commodities: Iron-ore prices are down by almost 30% since late April, but investors hoping to pick a bottom in the volatile commodity should proceed carefully.
Streetwise: Companies with the highest ratios of free cash flow to debt have outperformed those with the lowest by about five percentage points, which is why investors shouldn't worry about MCD, HD, HSY, and UPS; Companies with low leverage ratios and low interest coverage include MU, MRO, and ODP.