Barrons weekend update: positive on EBAY, SHPG, LKQ
Cover story: Barron's first annual list of the Top 200 Sustainable Mutual Funds is topped by Transamerica Large Cap Value, Davis Opportunity, American Century Equity Income, Loomis Sayles Growth, and Skybridge Dividend Value; The list is comprised of U.S.-based large-company, actively managed funds with the most sustainable portfolios, ranked by one-year returns.
1) Positive on EBAY: Company is overhauling how it lists merchandise for sale in a bid to address shortcomings that had dented growth; with expectations low and a modest valuation, contrarian investors should buy;
2) Positive on SHPG: Pharma giant continues to make acquisitions, growing a pipeline of drugs "capable of propelling sales and profits for years"; the acquisition of Baxalta could boost shares by more than 25%;
3) Positive on LKQ: Auto insurers increasingly seek lower-cost repairs, benefiting the provider of recycled and refurbished bumpers, fenders, hoods, and axles.
Tech Trader: It may be too soon to declare that the tech IPO market is back, says Tiernan Ray, but it's beginning to feel that way; Investors should keep an eye on component makers such as MRAM and FMAX, because they usually come to market with a roster of customers; Cloud and equipment vendors also tend to do well, while makers of integrating computing systems have struggled.
Trader: Economic growth should continue to boost markets in the long run, says Jason Price of Glenmede, and the current economic expansion isn't likely to stop, benefiting risk assets and equities; Positive on DKS: Sporting-goods chain has been among the biggest beneficiaries of the retail sector shake-up-it has reconfigured stores to sell more fitness apparel and footwear, and added new merchandise; The SEC's track record this year on bribery cases is strong, and investors benefit from knowing what companies have FCPA violations.
Interview: Keith Trauner and Larry Pitkowsky of GoodHaven Capital Management look for solid but beaten-down companies and wait for the market to recognize their value and reprice them (picks: ABX, WPX, LUK, VZ).
Profile: George Papadoyannis of Ameriprise Financial is a big believer in municipal bonds, and is scaling back on growth-oriented investments in favor of less-volatile options.
Mutual Fund Quarterly: Some funds categorized as "sustainable" don't really fit into the category; ETFs comprise only a small part of the sustainable investing universe, but that could soon change; Big fund firms are competing with Vanguard on ETF pricing, potentially taking losses to win assets; "Closed-end municipal bond funds have soared recently, but income investors who missed out can still find some opportunity"; Chinese and Japanese markets got a boost because of a strong fourth quarter for stocks, while U.S. share outflows were the result of concerns about the presidential election.
1) Positive on Samsung Electronics: After a recent 40% gain, shares still look cheap despite problems with the Galaxy Note 7 smartphone, because the company maintains a dominant position in numerous sectors; 2
) Cautious on ADSK: Shares are up 53% since September 2015, but the company's financials are a concern; much of the current optimism is already priced into shares, and investors should consider taking profits;
3) Some investors wonder if Bass Pro Shops is overpaying for CAB, whose retail stores are struggling and may have trouble generating the required cash flow to make the deal work.
European Trader: U.K. government bonds face bad news, because the pound's weakness is a sign that higher inflation will erode future coupon payments.
Asian Trader: Postal Savings Bank of China had a strong IPO, going public at more than book value, but as fears about China's massive debt recede, the shares are likely to gradually lose their premium.
Emerging Markets: This year's best-performing emerging-market mutual funds, including Brandes Emerging Markets Value fund, share at least one trait: betting on Brazil.
Commodities: "Oil prices jumped in late September on news of an OPEC deal to reduce production, but the agreement comes with too many caveats to push prices much higher."
Streetwise: Low-volatility stocks have been driven not just by the demand for safety, but also the reach for yield, but that demand is starting to wane, says JPM strategist Dubravko Lakos-Bujas.