Barrons weekend summary: positive on HLT, ITT; cautious on BAD.CA
Cover story: Many investors say T's bid for TWX is an admission that its lucrative wireless phone business is under pressure from TMUS and its acquisition of DirecTV hasn't yielded the expected benefits; Tie-ups between DIS/NFLX and Comcast/TMUS are possible, but unlikely anytime soon; The media deal most likely to succeed in the current landscape would be a CBS/VIAB merger.
Features:
1) Positive on HLT: In contrast to other hotel chains, Hilton's cheap shares look like an opportunity, since the company is opening hotels in profitable overseas markets and plans to split into three operations;
2) Positive on ITT: Conglomerate sells more pumps and valves to chemical and industrial companies than rival FLS, giving it lower exposure to the oil-and-gas industry, and its brake pad business is strong;
3) Hillary Clinton is widely expected to win the White House, but even if Democrats take the Senate, Republicans will control the House-a divided government scenario that should benefit investors;
4) Cautious on Badger Daylighting: Canadian company's revenue and truck fleet have grown during the past 15 years, but the oil slowdown, growing competition, and concerns about accounting practices should give investors pause.
Tech Trader: While AAPL still dominates the smartphone market, some investors wonder whether its dominance in the tech sector is eroding, while rivals such as AMZN and GOOGL expand into areas such as cars and artificial-intelligence devices.
Trader: Edward Crotty of Davidson Investment Advisors says sector rotation induced by higher rates should to continue as investors move into financials and some cyclical stocks; Positive on LAZ: The small investment bank's "top-tier brand allows it to punch above its weight class"; it faces little risk from proprietary trading while getting about half its profits from asset management; David Trainer of New Constructs says companies with a lot of money overseas, construction firms and their suppliers, and transportation outfits should benefit if Hillary Clinton becomes president.
Interview: Jon Pollock of Elliott Management talks about the firm's activist investing strategies, which have targeted a range of underperforming companies (picks: DVMT, CTXS, ECA, HES, AGN, Samsung Electronics; pans: Long-term bonds in the U.S., Japan, and Europe).
Small Caps: Positive on KRNY: Bank's shares have gained 40% since its so-called thrift conversion, and could rise over the next two years as it expands its commercial operations in real estate and business lending.
Follow-Up: Positive on KEY: The firm's credit quality has improved and it's making progress cutting $400M in yearly costs from the merger with Niagara Financial Group; shares are likely to see more gains.
European Trader: Positive on Compagnie Financiere Richemont: Luxury conglomerate should soon recover from problems including sluggish demand in Asia, volatile currencies, and weakening tourism in Europe-and shares are likely to rise.
Asian Trader: Positive on Great Wall Motor: Investors who have piled into Geely Automobile Holdings should reverse the trade, since Great Wall shares have more room to rise amid strong demand and sales in China.
Emerging Markets: A Donald Trump defeat in the presidential race is probably already priced into Mexican assets, which have gyrated inversely to his perceived election prospects.
Commodities: Supply-side reforms in China may have led to an excessive cut in coal production there, setting off an unexpected rally this year, but prices are unlikely sustain gains.
Streetwise: MS strategist Adam Parker screened for stocks that rank in the top half of the market in terms of quality metrics, trade below 15 times 12-month earnings forecasts, and should see positive growth next year; the list includes JPM, UTX, ETN, CSCO, HON, and JCI.
