Cover story: Barron's looks at the best and worst places for investors to find income in a rising-rate world in sectors that include European dividend stocks and funds (FDD, VGK, VOD, RDSA), electric utilities (UTG, DUK, SRE, XLU), U.S. dividend stocks and funds (NOBL, VYM, KO, BUD, PFE), junk bonds (OSTIX, HYT, VTA, JNK), municipal bonds (NAD, BTT, VWIUX, PHMIX), real estate investment trusts (SPG, BXP, EQR, VNQ), preferred stock (BAC Pfd L, PFF, JPI), Treasuries (TIP, TLT), telecom (T, VZ), and MLPs (EPD, AMLP, BWP).
Features:
1) Positive on PNC: Bank has a steady mix of fee income and a solid strategy for loan growth, and shares could generate a return of 15% during the next 12 months;
2) Positive on USFD: Company, the second-largest food distributor in the U.S., has focused on small chains and independent restaurants, which are faster growing than larger rivals, and shares could rise 14% in 2017;
3) Cautious on WAAS: Tampa-based group of desalination plants and water-cooler providers is unprofitable and its "water-as-a-service" concept remains questionable, both of which should be of concern to investors.
Tech Trader: Looking back on 2016, columnist Tiernan Ray says his bullish case on AMZN, NFLX, GOOGL, and FB was wrong, while he underappreciated AMD and NVDA, two of the best-performing stocks of the year.
Trader: Fourth-quarter results will show better growth for the first time in five quarters, says Bucky Hellwig of BB&T Wealth, thanks to strength in the energy sector and an improved U.S. economy; Fears in January that China's economic growth would materially slow proved unfounded; The column's "many bullish reviews of financial stocks, particularly big banks, panned out" in 2016, while healthcare stocks were a weak spot.
Interview: Ron Eptsein of Merrill Lynch predicts growth in defense spending in 2017, but urges caution in the commercial-jet sector (picks: GD, TXT, TDG, RTN).
Profile: Anton Schultz, manager of the RMB Mendon Financial Services fund, says that based on his current portfolio of around 60 stocks, smaller banks are the way to earn money (top 10 holdings: BNCN, YDKN, ACBI, OCFC, OPB, FBK, TBK, FFWM, LION, ABCB). Penta: BNY Mellon Wealth Management chief investment officer Leo Grohowski says the real play in the municipal bond sector is with riskier second-tier offerings.
Follow-Up: Positive on AMD: Stock was the best-performing in the Russell 2000 in 2016, and could add 15% or more during the next year, though there might be a brief pullback.
European Trader: "Eurozone stock markets appear to have suffered more from Brexit than the U.K. on concerns that other members might follow suit, potentially destroying the EU and taking the currency with it."
Asian Trader: Asia strategist Mixo Das of Nomura sees more pain ahead for the region's markets, but thinks India could distinguish itself from other countries with strong gains.
Emerging Markets: Donald Trump's presidential victory, higher U.S. interest rates, and a strong dollar have weakened the prospects for global trade and emerging-market exporters.
Commodities: "Zinc, nickel, and copper were the biggest winners as Donald Trump's presidential victory in early November kindled fresh optimism about U.S. infrastructure spending and economic growth."
Streetwise: The column looks back at 2016, noting it made good picks in industrials, energy, and infrastructure but was wrong on financials and biotech.
