Cover story: “Research suggests the combination of better-than-predicted earnings and revenue, followed by a quick, positive price reaction, tends to predict market-beating performance for months to come”; CAT and ADI are among companies with such potential upside.
Feature: Positive on CFR: Texas-based bank looks like a bargain for patient investors, with strength based on good loan underwriting and a conservative approach to allocating capital.
Tech Trader: Story profiles special purpose acquisition company Social Capital Hedosophia, which “could conceivably execute a promising acquisition, drive up the share price, and walk away with a profit,” but no company is guaranteed to succeed just because it has gone public through an IPO or a SPAC, says Tiernan Ray.
Trader: “Traders are increasingly confident that another rate hike is coming this year, with the market pricing in a 47% chance”; GS, rarely seen as an underdog, may be one now, but because the decline is due to its own missteps it should be able to fix its problems; Cautious on FDX: Few analysts expect the delivery giant’s earnings report to be good—instead, the question among many is just how bad it will be.
Interview: Sarah Ketterer, founder of Causeway Capital Management and manager of the Causeway International Value fund, looks for cheap, financially sound, and contrarian plays that can weather a downturn (picks: PDCE, ECA, CHL, Akso Nobel, Volkswagen).
Profile: Fabio Paolini of the AMG Managers Pictet International fund looks for companies that can grow cash flow and deploy it wisely (top 10 holdings: BUD, GSK, Japan Tobacco, BBVA, Inmarsat, Nestle, Vinci, CK Hutchison Holdings, SoftBank Group, Orpea).
Advisor Rankings: Barron’s list of the top independent financial advisors is led by Spuds Powell of Kayne Anderson Rudnick Investment Management, Robert Clarfeld of Clarfeld Financial Advisors, and Greg Miller of Wellesley Asset Management; Barron’s list of the top 30 RIA Firms is led by Creative Management, Mariner Holdings, and Edelman Financial Services; Story says large players dominate the RIA industry, but small firms can still carve out a successful niche.
European Trader: German chancellor Angela Merkel appears likely to win a fourth term, which could provide investing opportunities even if her electoral win isn’t a major market mover.
Asian Trader: Indonesia has been the best performing market in Asia after the region’s financial crisis in the late 1990s, though its benchmark Jakarta Composite Index lags India’s and China’s—a situation that could change.
Emerging Markets: Although inflation in Argentina has been hard for free-market reform president Mauricio Macri’s administration to tame, there are signs of progress.
Commodities: If lumber benefits from the recovery efforts under way following a string of recent storms, prices could reach a level they haven’t seen in a decade.
Streetwise: “Thanks to immense changes in the equity markets over the years, public investors, such as individuals, face diminishing odds of buying stakes in companies early in their growth cycles,” and there may never again be another AMZN for investors.