Saturday, November 19, 2016

Barron's weekend update

Barron's weekend update: positive on KMX 
Cover story: To help support his administration's ambitious spending and tax-cut plans at a time when the nation faces massive debt, Donald Trump may want to consider issuing Treasury bonds for the longest possible term, perhaps 100 years, as some other countries have done. 

1) In the wake of Donald Trump's victory, bonds have sold off sharply, making prices more attractive for a variety of municipal-bond close- and open-end funds, taxable closed-ends, and preferred stocks; 
2) Positive on KMX: Country's largest used-car seller is likely to benefit from dropping prices for used cars and a flood of off-lease vehicles about to hit the market; shares could see 20% upside; 
3) Cautious on YERR: Company has secured $1B in financing from U.S. conglomerate Amanda Enterprises, but investors should be wary of the suspect track record of its CEO, George Wight.

Tech Trader: Positive on Tectonic Audio Labs: Washington-based startup has developed a technology for small speakers that can produce brilliantly clear sound, which could help the streaming-music sector. 

Trader: The combination of better jobless claims and retail sales numbers with Donald Trump's stimulus plan could drive economic growth up by 3% or more in Q4; Small-cap stocks may slow down a bit after a recent rally, but they could outperform large-caps in the next year; Positive on UAL: Shares of the airline look to be the strongest in its sector based on fundamentals, and operating profit margins should continue to rise because of reduced costs and better hub management. 

Profile: Danton Goei, manager of the Davis Globalfund, is concentrated, with 54 holdings versus more than 2,000 for its benchmark (top 10 holdings: AMZN, GOOGL, Encana, APA, Berkshire Hathaway, WFC, Naspers, Did Chuxing Series A, JPM, JD). Barron's Roundtable: Four top investors-Phil Blancato of Ladenburg Thalmann Asset Management, Bill Roach of Globalt Investments, Keith Goddard of Capital Advisors, and Ben Johnson of Morningstar - say investors will continue to face the same big issues even under a Trump administration. 

Small Caps: Positive on ATRO: Shares of aerospace-parts maker are down because of problems at an ancillary unit, giving investors a chance to take advantage of the weakness. 

Follow-Up: Positive on NVDA, AMD: Shares of chip makers are benefiting from the companies' growing strength in the cloud market and have more upside, while earlier optimism about MU has yet to pan out; Positive on HAR: Samsung's acquisition of the dashboard electronics company implies a 5% annualized return for Harman investors who hold on to their shares; Positive on SAVE: Shares still have 20% upside as new chief executive Robert Fornaro continues to make changes. 

European Trader: "Technology stocks have fallen out of favor in Europe in recent weeks, but the sector still offers value for long-term investors," and shares such as Temenos, SAP, and Legrand are good long-term plays. 

Asian Trader: CS global chief investment officer Michael Strobaek says Australian shares are reasonably priced, and that it isn't fair to call China a currency manipulator. 

Emerging Markets: In the long term, Turkey can expand its export base, and the weak Turkish lira only helps on that score. 

Commodities: The prolonged bear market in corn could soon end, because supply may be reaching a peak while demand is still growing. 

Streetwise: Donald Trump's election notwithstanding, "the dynamics that keep Treasury yields low haven't gone away. Inflation can't be willed into existence."