Cover story: Barron’s and Calvert Research and Management unveil their second annual list of the 100 Most Sustainable Companies, based on hundreds of environmental, social, and governance factors; The list is topped by BBY, CSCO, A, HPQ, TXN, VOYA, CLX, GWW, MSI, and MAN; Story says the “personal passions” of a company’s chief executive are a key factor in pushing it toward sustainability.
Features: 1) Barron’s and Calvert’s ranked the 20 Most Sustainable International Companies, a list topped by Accenture, Brambles, Accor, Telenor, and Whitbread; 2) Positive on WAB: Shares of the passenger train equipment maker dropped after its proposed deal with GE Transportation failed to materialize, but the bearishness appears to be overdone and the shares look cheap; 3) Cautious on MYGN: Investors and scientists continue to debate the merit of the company’s GeneSight process, which analyzes genes associated with antidepressant drugs’ effectiveness, then guides doctors in the choice of treatments—and the shares aren’t likely to rise until a stronger consensus is formed; 4) Positive on BBT, STI: The banks’ tie-up makes sense: both are tightly managed and didn’t play any major role in the financial crisis, but though the deal may prompt more regionals to go shopping, suitable partners are rare; 5) The recent underperformance of Bill Gross provides raises a longstanding question about him: Was he a great investor, or just the beneficiary of a four-decade rally in the things he happened to trade, a lucky sailor on a current of declining rates and credit expansion?; 6) In a little noticed move, Steve Mandel of Lone Pine Capital, the most successful fundamental stock picker of them all, quietly stepped down after generating tens of billions of dollars in gains for his clients over the past two decades and establishing one of the best investment track records ever.
Tech Trader: Cautious on T: Telecom has been running a national advertising campaign promoting a new 5G service and is pushing to roll out the moniker to the top of smartphone screens, but new 5G chipsets aren’t available, so the company is essentially re-badging an improved 4G technology known at LTE Advanced—a move that’s bad for investors and consumers.
Trader: One puzzle for investors comes from the bond market, where yields have been steadily falling—the 10-year Treasury yield dropped 0.058 percentage point, to 2.632% last week—even as risk appetite and economic data have started to improve; Positive on BA, EL, MTB: Companies whose earnings estimates have been rising for the first quarter and beyond could be demonstrating resilience in the face of a slowdown; “The impact of the Sino-American trade conflict could be felt in currency markets if a deal isn’t reached on schedule by March. No deal would mean higher tariffs on Chinese goods—which could also mean additional, unexpected upward pressure on the U.S. dollar.”
Interview: Abhay Deshpande of Centerstone Investors fund will park money in cash or gold if he can’t find enticing stocks, since avoiding losses is a top priority—but he’s optimistic about stocks now, and is on a major shopping spree (picks: CIOXY, Genting, FAST, MHK, ISS, Compagnie Financiere Richemont).
European Trader: Positive on Pirelli: The tire-maker’s stock looks set to go up during the next 12 months, propelled by rising earnings as the company shifts to higher margin products and benefits from the increased demand for performance tires.
Emerging Markets: With a nearly 16-fold gain, Indonesia has been Asia’s best-performing market over the past 20 years through January, far outpacing China and India, and it is likely to maintain its long-term lead over regional rivals this year.
Commodities: “Lumber prices have made quite a comeback this year, climbing by 25% in January and nearly erasing the decline suffered in 2018, as the market gets a boost in demand ahead of the spring building season. Looking ahead, however, analysts urge caution.”
Streetwise: A proposal by senators Charles Schumer and Bernie Sanders to impose tests on corporations before they engage in stock buybacks “is just one of a series of bad ideas emanating from Washington. Others include a wealth tax and a 70% top income-tax rate.”