Cover story: Eight energy stocks look tempting after a bad performance by the sector this year; these companies are restraining capital spending and focusing on earnings and free cash flow (Positive on CVX, XOM, CNQ, SU, APA, EOG, COG, RRC).
Features:
1) Positive on WHR: Shares have gained by about 90% since the end of 2012, but they remain a bargain given the company’s rising free cash flow and strong execution;
2) European regulations known as MiFID II could reduce overall spending on the analysis of stocks and bonds, narrow the coverage of small stocks, and force large brokers to downsize analyst teams;
3) Stocks recommended in bullish Barron’s stories this year have trailed their benchmarks, but investors who heeded warnings about risky stocks did well.
Tech Trader: Cautious on MU: The market this year for memory chips has been strong, giving Micron a major boost, but shares trading at five times projected 2018 earnings aren’t a bargain—they’re a sign the good times can’t last.
Trader: “Any lingering view that the Fed might raise rates in September is nearly gone, and December is now the earliest point at which markets look for another hike”; Positive on CSCO: Hardware giant is seen as “old tech” and thus not likely to benefit from the move to the cloud, but shares could provide a double-digit annual return with little downside during the next 24 months; Cautious on Verint Systems: Company’s revenue growth has dropped steadily and non-GAAP earnings numbers can’t hide the worsening performance.
Profile: Ford O’Neil of Fidelity Total Bond says interest rates are likely to rise modestly as inflation inches higher, but strong demand for fixed income should have a stabilizing effect (top 10 categories: U.S. Treasuries, corporate investment grade, Agency MBS, corporate high yield, TIPS, leveraged loans, emerging markets, CMBS, other government).
Interview: Jason Kritzer and Samantha Pandolfi, co-managers of the Eaton Vance Worldwide Health Sciences fund, talk about where they see innovation and investment value (picks: VRTX, ZTS, SHPG, ISRG, GILD).
Small Caps: Positive on OEC: Company, the smallest of the three major carbon-black specialty firms, is in a growing market and is substantially more profitable than its peers, CBT and Aditya Birla.
Follow-Up: Positive on VC: Auto-electronics manufacturer is thriving this year amid a focus on six key markets following its bankruptcy, and shares, already up this year, have more room to go.
European Trader: Positive on Adidas: With the stock up 40% investors might think it’s time to take profits, but some analysts think shares still have significant upside, especially if Adidas can boost profit margins.
Asian Trader: Analysts remain split on whether Cosco Shipping Holdings or Orient Overseas shareholders will benefit more from their tie-up.
Emerging Markets: A look at high-quality income stocks from Societe Generale’s monthly emerging-market quality income screen, each of which offers a dividend yield of greater than 4% (Positive on VIV, ASX, EOCC, OMAB).
Commodities: “Red-hot dry heat in the western part of the Upper Midwest is threatening the corn crop and could spark a big rally.”
Streetwise: Movie-theater stocks will remain volatile as studios seek new distribution channels, “and while they might retreat to levels that justify short-term bounces, the long-term pressure remains.”
