Saturday, August 26, 2017

Barrons weekend summary

Barrons weekend summary: Cover story positive on suppliers for military space tech; positive features on PYPL, MDT, YUMC, VNO, SLG 

Cover story: With rocket launch costs falling during the past decade and tech billionaires pouring money into space ventures, a “new space age” is here; Private startups such as Arianespace, Blue Origin, OneWeb, and SpaceX pose a risk to incumbent satellite companies, but companies that cater to the military, such as BA, LMT, OA, and VSAT, are safer bets for investors. 

1) Positive on VNO, SLG: Continued growth in commercial real estate development in Manhattan has dinged the shares of the two REITs, but industry pressure is already priced in, and each looks inexpensive; 
2) Positive on MDT: Shares are down amid investor skepticism about the medical-device company’s ability to deliver continued growth, but the concern seems overblown, and new product launches should boost margins; 
3) Positive on YUMC: As China’s middle-class population continues to grow the company is set to add 15,000 locations during the next 15 years, boosting profit growth and creating the possibility for a 30% return over the next year or two; 
4) Positive on PYPL: Payment company’s deals with V and MA and its Choice feature have paid off, and new innovations it plans to release could send shares up by another 16%.

Tech Trader: Positive on INTC: Sectors in which the tech giant once dominated, including servers and personal computers, have slowed down, but after missing the mobile revolution it could still gain ground in the computer-networking area dominated by CAVM, NXPI, QCOM, and Imagination Technologies. 

Trader: The upcoming U.S. payrolls report could go a long way toward determining whether the Fed will raise rates, as the futures market is predicting, or keep tightening; Value stocks have lagged so badly during the past 10 years that may now be time to buy them; Canadian Tire—“a blend of SHLD, WMT, and TGT rolled into one”—has so far avoided being disrupted by AMZN, partly because Canada is a low-density market. 

Profile: Mike Buckius and Paul Stewart of Gateway fund, one of the largest and oldest alternative mutual funds, employ an options strategy to get around high asset prices and geopolitical tension. 

Interview: Doug Ramsey of Leuthold Group believes a short-term downturn is ahead, to be followed by an uptick in 2018 that could be the bull market’s last. 

Follow-Up: Positive on AVGO: Shares still have room to run as the chipmaker benefits from AAPL’s new iPhone and ANET’s ongoing success, and for now the shares are reasonably priced. 

European Trader: The rally in Polish stocks doesn’t seem likely to end yet; valuations remain attractive and the country’s economic and monetary policy backdrop is helping. 

Asian Trader: Shares of South Korean stocks have taken a hit amid growing tensions between the U.S. and North Korea, presenting a buying opportunity for investors who can look past the situation. 

Emerging Markets: Positive on INFY: Despite the recent board shakeup, company’s shares are “too cheap to ignore,” and several catalysts—including a major buyback—could push them higher. 

Commodities: “When it comes to major oil producers’ market-share struggle against their U.S. shale rivals, there has been no clear winner—and that could keep prices stuck between $40 and $50 a barrel for the rest of the year.” 

Streetwise: Fundstrat’s Thomas Lee expects companies to respond to tightening labor markets by spending more on technology and automation, and suggests investors look at “wage insensitive” companies with large market caps and sales per employee (Positive on Liberty Media, FB, OLED, AAPL, SBAC, ABMD)