Cover story: In the second installment of Barron’s Roundtable, 10 investors discuss the big-picture outlook for the economy, interest rates, financial markets, and concerns about tech disruption and government debt; Picks include EDU, NOC, Recruit Holdings, TRP, ICLN (Abby Joseph Cohen); EEM, GDX, VSGBX (Jeffrey Gundlach); WCN, MTN, SSNC (Henry Ellenbogen); HXL, LIN, Takeda, GOOGL, DWDP (William Priest); CCK, SEE, DLTR, ANIP (Oscar Schafer); Lanxess, PKG, OEC, Dart Group (Meryl Witmer); BATRA, FOX, HRI, MGM, NAV, GFF, ENR (Mario Gabelli); USB, ABBV, DIS, LMT, HTGC (Scott Black); CHL, Michelin, GILD, Roche Holding, Telefonika Deutschland (Rupal Bhansali); CDNS, SNPS, CERN, LIN, DIS (Tood Ahlsten).
Features: 1) Positive on NEM, GOLD: Newmont’s acquisition of GG and the merger between Barrick Gold and Randgold Securities creates the two largest gold miners in the world, offering hope for one of the worst-performing sectors over the past seven years; 2) Positive on ILMN, TMO, DHR, A, TECH: Five companies are a good way for investors to play the healthcare sector—they are poised to capitalize on medical innovation and demand for care in emerging markets; 3) Positive on KRC, VNO: Though office REITs have faced pressure recently, Kilroy Realty and Vornado Realty Trust have solid prospects amid a U.S. economy that continues to grow, buoyed by strong job numbers and a low unemployment rate.
Tech Trader: Epic Games’ hugely popular Fortnite videogame has stolen the spotlight from EA and ATVI—both of which have underperforming game pipelines and are down nearly 40% from last year’s highs—and even has NFLX concerned. Trader: The S&P 500’s rally has taken the index back above its 50-day moving average, and now it just has to stay there, says Randy Watts of William O’Neil; Positive on COST: Retailer has a voracious fan base and a renewal rate of more than 90%, and a slump in the shares since September creates a good buying opportunity; With GE shares up 18% year to date and up 34% from a 52-week low, investors seem happy with the company’s pace of change for the time being.
Profile: Mark McKenna manages the BlackRock Event Driven Equity fund, which profits off mergers, spinoffs, restructurings, management changes, and other events, a strategy that succeeds because it is largely uncorrelated to the market.
European Trader: Positive on BAE Systems: Shares of the U.K.-based defense system have taken a hit because of ties to Saudi Arabia, but the drop presents an opportunity for investors to buy shares with good prospects for capital gains and dividend growth.
Emerging Markets: Cautious on Tencent Holdings: Though the company has a billion regular users and just issued a major upgrade to WeChat, investors aren’t convinced it can maintain the growth spurt its valuation reflects.
Commodities: “Palladium started the year on a positive note, with futures prices up by more than 10% after hefty gains in the last three years,” and analysts remain upbeat about the metal’s long-term prospects.
Streetwise: Columnist Lawrence Strauss discusses why he doesn’t bet on sports even as the gaming landscape evolves to include online and mobile-phone platforms.