Saturday, February 4, 2017

Barrons weekend update

Barrons weekend update: Positive on AMD and VSTE; cautious on CMG and Snapchat 
Cover story: Shares of CMG look cheap compared to a year ago, but investors should be cautious: boosting sales and luring back lost customers could involve greater long-term sourcing and marketing costs; A healthy return for investors would require the company to surpass past growth estimates. 

1) Cautious on Snap: As the company prepares to go public, the risk is that it will be more like TWTR and less like FB; it is nowhere near break-even, and is likely to incur losses well into the future and face slowing growth-and investors would be wise to pass; 
2) Positive on AMD: Despite big technological strides during the past years, company has failed to gain ground on rival INTC, but that could change under new chief Lisa Su, who has streamlined the business; 
3) Positive on VSTE: Shares of Dallas-based energy company "offer an appealing play on the depressed electric-power market in Texas, and trade at a discount to rivals CPN, DYN, and NRG; 
4) Story on the healthcare challenges facing retirees says longevity is the biggest driver of total healthcare costs, meaning healthy retirees end up with higher lifetime costs; 
5) A look at what people need to know about enrolling in Medicare, a process that can be complicated and entail heavy penalties if they wait too long.

Trader: Snap's IPO should concern the film, television, and publishing industries, because it points to the growing popularity of consumption that's more about a burst of activity and quickly competing a task rather than spending the time required to read or watch a movie. 

Trader: Many investors seem to believe the next market move will be higher and that they'll see a downturn before it hits, but that may be presumptuous, says MS equity strategist Adam Parker; After outperforming the market in 2016, value stocks have stalled so far this year, but investors have good reason to be confident about a rebound; The same forces helping banks should help insurers, and many insurances stocks appear cheap compared to those of banks; "The drop in retail stocks make them a tempting buy," but investors should be careful about jumping into the sector. 

Interview: Ed Yardeni of Yardeni Research said he is giving President Trump the benefit of the doubt, and hopes the new administration will implement good policies and jettison bad ones. 

Profile: James Michal, co-manager of the Guggenheim Macro Opportunities fund; the fund has delivered 6% annual returns and can own virtually any kind of fixed income, as well as equities, currencies, and alternative investments (top five fixed-income holdings: asset-backed securities, bank loans, nonagency mortgage-backed securities, high-yield corporate bonds, commercial mortgage-backed securities). 

European Trader: "The European banking sector is no longer the investment minefield it was even six months ago, but careful stock-picking remains the order of the day" (Positive on BBVA, ING). 

Asian Trader: Asian stocks could drop 10% on the Trump administration's protectionist moves, and lesser tail winds from commodity prices; unless commodity prices rally, Asian earnings growth could fade. 

Emerging Markets: What will ultimately weigh on the dollar, and therefore emerging-market assets, will be policy, not comments from Donald Trump or other politicians. 

Commodities Corner: "OPEC's decision to dial back oil production is pushing crude prices higher and breathing new life into the U.S. oil patch," and prices could hit $55-65 this year. 

Streetwise: Donald Trump's promise to cut taxes, spend on infrastructure, and repatriate foreign cash should boost the U.S. economy, and the currency-but a stronger dollar won't help the manufacturing sector.