Sunday, June 25, 2017

Barrons weekend summary

Barrons weekend summary: Positive on ORCL, CI, WHR, NCR, RHT, AIZ; Cautious on FL

 Cover story: With the fiduciary rule becoming law, sales of annuities are down, and the slump is likely to continue, but innovation at annuity companies is likely to benefit investors; Barron’s looks at 50 of the most competitive contracts across different categories. 

Tech Trader: Positive on ORCL: Company has put to rest fears it will be rendered obsolete by cloud computing; its cloud offerings are doing better than many observers expected, while its traditional software isn’t faring as poorly as many believe. 

Trader: “The bond market is telling you one thing and the stock market is telling you something else,” says Barry Kupferberg of Trilogy Capital Management; “The latest biotech rally looks to be about something more than the group’s retirement as Washington’s punching bag,” and investors should buy on the dips; Positive on WHR: As chief Jeff Fettig prepares to step down after transforming the company into an international powerhouse, the shares still look cheap. Profile: Afsaneh Beschloss, chief executive of Rock Creek Group, discusses the outlook for hedge funds and opportunities in emerging markets (equity holdings: Aarti Drugs, TAL, EDU, Safaricom, Tenent Holdings, China Mobile, Sino-Thai Engineering and Construction, Beijing Enterprises Water Group). 

1) The underperformance of Canadian stocks relative to the S&P 500 this year has drawn both long and short investors from the U.S., who need to heed differences in regulation and liquidity; 
2) Cautious on Exchange Income Corp.: Canadian company, which began as a tax-sheltered income trust and still markets itself as a dividend play, has become the latest target of U.S. short sellers; 
3) Positive on NCR: Software company’s shares are down this year on news a key investor sold a large stake, but earnings are up and shares—which could gain 30% this year—offer tech exposure at a decent price; 
4) Positive on AIZ: Firm is in the midst of a transformation, focusing more on fee-based businesses rather than taking on more risk through underwriting, and shares could still double in price. 

Follow Up: Positive on RHT: Company is benefiting from major cloud deals and shares are rising, but investors should hold off on taking profits given the potential for double-digit returns this year; Cautious on FL: A potential deal between AMZN and NKE could continue to dent the shoe retailer’s growth amid slowing same-store sales; Positive on CI: Although the fate of the Senate healthcare plan is unclear, an overhaul of the Affordable Care Act would help the company by removing a $14B tax in 2018 unrelated to any broad corporate tax cuts. 

European Trader: Positive on Munich Re: Firm, “one of the world’s largest reinsurance companies, could be poised to deliver solid investment returns after weathering tough market conditions in recent years.” 

Asian Trader: Chinese companies are increasingly looking for overseas opportunities; GS sees a number of good plays for investors on this theme, including BABA, Nexteer Automotive Group, and Han’s Laser Technology Industry Group. 

Emerging Markets: Poland is the best-performing emerging market in the MSCI Emerging Markts ETF, followed by Turkey and South Korea; Russia, Qatar, and Pakistan round out the bottom. 

Commodities: Iron ore prices are set to drop, primarily because of the situation in China, where the economy is slowing down, reducing demand for steel. 

Streetwise: Low inflation can be good for stocks, but investors may be overlooking the corporate-profit squeeze that can occur if wages climb faster than prices.