Saturday, March 24, 2018

Barrons weekend update

Barrons weekend update: cautious cover story on Facebook; positive feature on TWX; cautious on DBX 
Cover story: FB faces a consumer and investor backlash in the wake of the Cambridge Analytica data scandal; “With more than two billions users, Facebook is a top target for privacy concerns, and it’s almost certain that the company will not walk away unscathed”; its challenge will be how quickly and effectively it can change. 

Features: 1) Cautious on FB: Shares look tempting after a recent drop, but investors must determine whether the potential backlash against Facebook’s privacy problems is already priced in; 2) Barron’s 2018 list of Best Online Brokers is topped by IBKR, Fidelity, AMTD, SCHW, and TradeStation; 3) Positive on TWX: As the Time-Warner/T antitrust trial gets under way, the media giant’s shares look appealing based on their underlying value and the telecom’s strong chances of winning approval for the deal; 4) Cautious on DBX: “Despite its spectacular debut, it’s fair to ask whether Dropbox has made all the easy money it can, and whether the next billion will come at a higher cost.” 

Tech Trader: Positive on MDB, SEND: Among smaller cloud software companies whose shares are soaring amid renewed mergers-and-acquisitions fervor in the sector; investors want such firms in their portfolios because their outperformance helps achieve alpha. 

Trader: Investors aren’t yet worried about tariffs, and the current situation would have to get more out of hand than it is today for tariffs to have a bigger impact on the market; Cautious on GIS: Shares merit some of their recent downside, but the company’s reduction in outlook appears tied to self-inflicted miscues, says BMO analyst Kenneth Zaslow, and its valuation gives reason for optimism; Cautious on THS: Matters look grim for the maker of private-label foods, but some bullish observers expect incoming CEO Steven Oakland to put the company back on track. 

Profile: David Semple, manager of the VanEck Emerging Markets fund, avoids cyclical companies whose fates are tied to commodities or exports predicated on cheap labor (top 10 holdings: Tencent Holdings, BABA, Samsung Electronics, Ping An Insurance, Sberbank of Russia, Naspers, HDFC Bank, JD, CIE Automotive, Beijing Capital International Airport). 

Interview: Stephanie Pomboy, founder of Macromavens, says the next crisis will come from the Federal Reserve, whose march to tightening will stress tapped-out consumers and overstretched companies. 

Small Caps: Positive on LZB: Shares could rise 20% within a year or two, propelled by higher consumer spending, a new deal to sell on AMZN, and successful efforts to reach millennials. 

European Trader: Cautious on Micro Focus: Shares of the business software company plunged last week, and while bulls say the dive is overdone, bears make a convincing case that there’s little hope for a quick turnaround. 

Emerging Markets: Moscow’s relationship with the West may be deteriorating, but as long as natural-gas sales to the EU are unhindered, “nothing short of armed conflict” with Russia will deter investors. 

Commodities: China’s planned launch of a yuan-denominated crude futures contract could become a benchmark for global oil transactions, but it must overcome a range of challenges first. 

Streetwise: Double-digit growth is crucial for tech companies such as FB, and slowdown will hurt the social site—but of greater consequence will be what happens to its reputation.