Barrons weekend summary: cautious on pharmacy benefits managers; positive on mortgage insurers
Cover story: There are a number of reasons for investors to be concerned about the prospects of pharmacy-benefit managers, which haven't been effective in keeping rising drug costs contained, a task some top corporations are taking on themselves (Cautious on ESRX, CVS, UNH).
Features:
1) Positive on ATVI, AHS, ANET, FB, SWHC, SPLK: Estimize, a crowdsourcing platform for earnings and revenue estimates, says Wall Street has underestimated the earnings potential of these six companies;
2) Positive on MTG, RDN, NMIH, ESNT: Shares of mortgage insurers are down from a year ago, but some analysts expect them to rebound when the housing market gains steam;
3) For the second year in a row, a survey from the National Association of Realtors shows Chinese nationals dominating the ranks of international home buyers in the U.S.
Tech Trader: The financial technology sector, or FinTech, is moving beyond a focus on payments driven by early players such as PYPL and SQ and into robo-advisors, exchanges, trading platforms, and financial-data companies.
Trader: Issues such as the Brexit and the U.S. elections should be capping market enthusiasm, says Mark Luschini of Janney Montgomery Scott, but the market doesn't seem to care; Positive on CSCO, IBM, APD, PX, OXY, VZ: These six laggard stocks should begin to outperform once the economy picks up, according to research from Fundstrat; Positive on AIG: "If rates don't go up, AIG's warrants could take a while to be in the money, but as the insurer executes on its plans, there's plenty of time for the warrants to grow."
Interview: John Wilson, managing director and senior equity portfolio manager, Columbia Threadneedle focuses on new-product pipelines where the Street's estimates might not be properly modeled (picks: BMY, CMCSA, FB, MDT, SWK, TJX).
Small Caps: Positive on CSW: Company recently spun off from Capital Southwest "has an opportunity to improve profit margins by better integrating its manufacturing platform, and it could drive growth by cross selling."
Alternative Investments: Charles Royce, manager of the Royce Pennsylvania Mutual Fund, is looking at alternative investment management companies such as ARES, KKR, and APO.
European Trader: Portfolio managers who run U.S. mutual funds that invest in British stocks have been fairly upbeat despite the Brexit vote, and there is an overall sense that U.K. shares are stabilizing.
Asian Trader; Defensive stocks in Asia have become expensive, and even income investors should look elsewhere, especially toward the financial industry.
Emerging Markets: "Recently considered a good idea, investing in Turkey has quickly turned into a nightmare as the government uses increasingly autocratic methods to purge its society following a failed coup."
Commodities: Natural gas prices in the U.S. have risen since winter, and they may still have room for gains.
Streetwise: "Investors looking for safety and income have driven utility stocks to pricey levels and low yields," and though the rally has yet to wind down, investors should take profits.
