Sunday, November 13, 2016

Barrons weekend update

Barrons weekend update: Positive on certain steel, financials, and pharma names following election of Trump 
Cover story: Donald Trumps agenda as president could promote economic growth, but the big question for investors is whether his pro-growth, tax-reform, and fiscal-stimulus policies will outweigh his protectionist views; On trade, he may end up speaking loudly but carrying a small stick. 

Tech Trader: Nobody in the tech sector knows what to expect from a Trump presidency because he has issued conflicting statements on topics such as the H-1B visa program; The biggest payoff for tech giants could be a repatriation of their enormous cash piles stashed overseas. 

Trader: Market gains after Donald Trumps election victor werent spread evenly across sectors, and the biggest surprise was that basic price trends remained unchanged for some parts of the stock market; Infrastructure stocks are up on the prospects of more action in that sector under the Trump administration (Positive on VMC, MLM, URI); Large pharmaceutical companies could benefit from Donald Trumps proposals to let companies bring home money trapped overseas. 

Profile: Vince Montemaggiore, manager of the Fidelity Overseas fund, retooled the fund from its lower-quality cyclical bent to one focused on high-quality companies with high returns on capital (top 10 holdings: SAP, TOT, BUD, SNY, Nordea Bank, AIA Group, Henkel, Fresenius, Novo Nordisk). 

Interview: Howard Penney, managing director at independent research firm Hedgeye Risk Management, talks about what restaurant stocks might benefit under a Trump administration (picks: PNRA, WFM; pans: CMG, PLAY, KR). 

1) Jeffrey Gundlach of DoubleLine Capital, who predicted a Trump victory in January, predicts a rise in bond yields that could lift the yield on the 10-year Treasury note to 6% in the next four or five years; 
2) A look at companies likely to be winners and losers under a Trump administration (Positive on X, NUE, MLM, VMC, JPM, BEN, PFE, BMY, CVI, VLO; Mixed on HCA, THC, DUK, VZ); 
3) Positive on LOPE, DV, CPLA: Among for-profit colleges that could profit with Donald Trump in the White House, based on hopes federal oversight will ease; 
4) Positive on TMO: Shares of the top seller of laboratory gear could benefit from a smoother budget process under a unified government and consolidation in the industry; shares could see 30% upside; 
5) Positive on DFS: Even amid growth in subprime lending, the company has shown discipline, and if it can grow its loan book faster, shares could offer a 12% return during the next 12 months. 

Small Caps: Positive on AVD: Shares are down in a slow agricultural sector, but the company is launching new products and stands to benefit from acquisitions, which should translate into higher earnings. 

Follow-Up: Negative on CVS: Company lacks the tax-dodging opportunities of multinationals, and the growth that originally attracted investors to shares is no longer steadymaking it time to sell; Positive on LVLT, CTL: The companies merger is good for investors, because it should give Level 3 shares 25% upside, while Century has a 9.1% yield. 

European Trader: With Donald Trumps presidential victory, the outlook for Europes banks has improved, because he isnt expected to be tough on regulationthough many of his ideas make investors uneasy. 

Asian Trader: Asian markets have been unexpectedly tolerant of Donald Trump, and his win probably will extend the value-oriented theme that has prevailed since Brexit. 

Emerging Markets: The reordering of markets is happening, absent clarity from Donald Trump on his cabinet, strategy, and foreign policy. But the strengthening dollar is already a sign of tough times ahead for foreign currencies. 

Commodities: The price of nickel hit a peak for the year last week, and could rise further on expectations of stronger demand from China and the U.S.

Streetwise: A shift in investor focus from assets that benefit from globalization to those boosted by domestic consumption could portend a Main Street recovery under a Trump administration.