Saturday, August 19, 2017

Barron’s weekend summary

Barron’s weekend summary: Positive cover story on SBUX; positive features on LMT, GDI; cautious on MSI 
Cover story: Positive on SBUX: Coffee chain’s mobile order-and-pay feature has become a major hit, forcing the company to rethink store layouts and hire preorder specialists to manage the greater demand; As rival services from PYPL and AAPL languish, Starbucks’ pay app could help send shares up 20%. 

1) Positive on LMT: The top American defense contractor could see more gains ahead as U.S. military spending increases amid growing global tensions, making it a safe bet in tumultuous times; 
2) Cautious on MSI: As FirstNet—a multibillion-dollar broadband network that links the country’s police, fire, and emergency officers—is rolled out, demand for Motorola’s radios could plummet; 
3) Positive on GDI: Under owner KKR, the maker of pumps, compressors, and flow-control devices has hired new talent, accelerated growth, and allocated capital more wisely, giving shares a 40% upside. 

Tech Trader: Positive on VERI: As artificial intelligence continues to evolve, the company is leading the way in bringing it to the enterprise with a platform that can run AI to manage a range of tasks for businesses of all sizes. 

Trader: The recent market drop ended the S&P 500’s streak of 196 days without registering as oversold, based on its proximity to its 50-day moving average, according to Bespoke Investment Group; Ongoing turmoil “could be the new normal for retail stocks, but for intrepid investors with the stomach for it, the market’s sudden swings could provide opportunity”; Imperial Capital analyst Michael Derchin says the lower reaches of the airline sector could see a wave of consolidation. 

Interview: Henry Ellenbogen of the T. Rowe Price New Horizons fund “invests in a winning mix of public and private growth companies,” many of which apply technology in innovative ways (picks: MTN, GWRE, Liberty Expedia, GRUB). 

Profile: Nevin Chitkara, portfolio manager of MFS Value, looks for durable companies that can stand the test of time, generate cash, and maintain a strong balance sheet (top 10 holdings: JPM, PM, JNJ, WFC, ACN, MDT, USB, JCI, MMM, PFE). 

Follow-Up: Positive on AAP: Though shares are down on second-quarter results amid industry softness, the company’s turnaround and future prospects remain intact; Dana Telsey of Yardeni Research says retail investors should focus on high end and general retailers and avoid the apparel sector (positive on LVMH, Kering, EL, ULTA, TGT). 

European Trader: Positive on Pandora: Investors have sent the Danish jewelry maker’s shares down, but they look like a deal for bargain hunters, and the company is set to deliver solid growth. 

Asian Trader: The “mixed ownership” paradigm in which the Chinese government had private companies invest in China Unicom will eventually be found in energy and transportation. 

Emerging Markets: The emerging markets technology sector continues to expand rapidly, making some investors nervous, but a correction probably wouldn’t lead to another dot-com bust. 

Commodities: The drop in spring wheat production has eaten into supplies, but wheat overall isn’t in short supply, and prices aren’t likely to keep rising. 

Streetwise: “The fervor with which we seize prevailing narratives points to market in which liquidity is abundant, valuations are rich, and investors are increasingly nervous about festering risks,” says Kopin Tan.