Cover story: Though Wall Street is concerned tech stocks are too pricey, too popular, and comprise too large a portion of the Nasdaq, the sector has delivered strong earnings growth for years and will continue to do so as tech encroaches into more areas of the economy.
1) Positive on AMZN: The e-commerce giant’s acquisition of WFM is likely to shake up the retail sector, affecting heavyweights such as KR, COST, TGT, WBA, WMT, as well as tangential companies such as MKC, CAG, and GIS;
2) Positive on GE: New chief executive John Flannery seems well suited to the job, and shares could top $32 in a year as he improves operating results and restores faith in guidance;
3) Positive on BAC, C, GS, JPM, MS: Large banks are likely to pass stress tests and announce plans for share buybacks and dividends, while earnings are rising, and shares are cheap.
Tech Trader: Positive on DLR: Company stands out as an alternative to the ‘FANG’ tech stocks; the REIT’s data centers are the foundation of online commerce, cloud computing, artificial intelligence, and other trends.
Trader: Investors seeking to make sense of the current market should step back and focus on fundamentals and valuations, says DB strategist Binky Chadha; Positive on GIS: For contrarian investors seeking a counterweight to tech and fast growth, the food giant could return 20% during the next 18 to 24 months, with little volatility; Positive on GWR: Railway provides another option for investors avoiding the tech sector; global growth, even if slow, should eventually give the moribund shares a boost.
Interview: Famed investor Sam Zell talks about real estate, Donald Trump, and how his immigrant parents gave him the foundation for success.
Profile: Lori Keith and Matthew Gershuny of the Parnassus Mid-Cap fund look for high-quality companies that generate high returns on capital and aren’t overburdened with debt (top 10 holdings: MSI, CRSK, CAH, XYL, CLX, PX, XRAY, PNR, SJR, FISV). Penta: Barron’s list of the top 100 hedge funds is topped by EQMC Europe Development Capital, Margrove Partners, and Segantii Asia-Pacific Equity Multi-Strategy; Interview with Francisco de Juan and Jacobo Llanza of EQMC; Andy Saperstein and Shelley O’Connor of Morgan Stanley Wealth Management talk about how they’re focused on reinventing the firm’s digital platform; “Proposed cuts in the pass-through tax rate will benefit the very rich more than small businesses”; Fiduciaries may be setting themselves up for lawsuits, and litigation targeting estate-related trusts and trustees is on the rise; “Luxury watch rentals have become a fast-growing business due to a generational difference in lifestyle priorities and interests”; Prices for vintage airplanes are dropping, making it a good time to buy; A look at three next-generation helicopters that are futuristically styled and feature smart technology.
Follow-Up: Positive on STRA, LOPE: Shares of for-profit education companies are on the rise under the Trump administration, and they have an ally in education secretary Betsy DeVos; Positive on ABB, ROBO, Kuku, Yaskawa Electronics, ROK: Shares of robotics companies remain attractive for long-term investors despite some concerns about the sector.
European Trader: Positive on Siemens, Schneider Electric: Companies provide investors with exposure to the growing robotics and automation business.
Asian Trader: Investors seem confident that the MSCI index will approve the inclusion of Chinese stocks in its widely tracked indexes.
Emerging Markets: Emerging markets will be the investment growth vehicle for the next decade, says PGIM, based on three key themes: the jump into the digital age, modernization of infrastructure and local markets, and spending by the EM middle class.
Commodities: With sugar supplies outstripping demand, prices have fallen by more then 30 percent this year, and a rebound isn’t likely on the horizon.
CEO Spotlight: KMB chief Thomas Falk has trimmed bureaucracy, resulting in $3B in cost savings, leaving the company well-positioned to deal with future challenges.
Streetwise: AMZN’s purchase of WFM should put heat on grocers to improve their operations, because the deal is likely to lead to slimmer profits in a sector where margins are already razor-thin.