Features: 1) Cautious on LYFT: The ride-hailing startup’s upcoming initial public offering is likely to be a hit, and with a float of just 12% of the shares outstanding and high revenue growth, the stock could pop on its debut—but investors should take a pass until the company proves it has a path to profitability; 2) Activist investors have generally become accepted by the investing community, but there is evidence their strategies don’t work as well as one might think: Activist hedge funds trailed the market by about five percentage points a year since the end of the financial crisis, and trailed the broader hedge fund industry by about five percentage points a year since the end of 2016; 3) Nearly 19 million Americans suffer from substance-use disorder, and overdoses are the leading cause of accidental death—yet affluence not only offers no protection, it can make matters worse as people with money spend vast sums in a largely unregulated treatment industry; 4) Even small investors can think like activists by looking at stock in terms of acquisition potential and studying cash conversion—the time it takes for a product sale to turn into cash—and asset turnover, the amount of sales generated by an asset; 5) Story looks at how parents can put their adult children on better financial footing without creating an air of entitlement or damaging their own financial situations.
Tech Trader: Positive on GOOGL: Google's rollout of Stadia, which enables gamers to play streamed games on their computers, televisions, and smartphones without the need for a separate console, is the latest example of the tech battle moving to the cloud, which offers quicker scalability, cost efficiencies, and a closer connection to the customer.
Trader: The yield-curve inversion might not be signaling a recession yet, but there are other reasons to worry, says Richard Farr of Merion Capital Group, who says earnings season, which gets under way in April, is a primary concern; Positive on IIPR: As the only U.S.-listed REIT serving the cash hungry cannabis industry, IIP has turned its cost-of-capital advantage into steady growth and a generously-valued stock; Positive on CAT: Changes the company made to its manufacturing system are improving operating margins and preparing the company for the next downturn, but investors so far don’t seem impressed—shares are trading at a 35% discount to the broader market.
Interview: Rod Lache and Don Galves of Wolfe Research say the automotive landscape will change dramatically during the next five to 10 years, creating opportunities and disruption (picks: APTV, BWA, GM, LEA, TSLA).
Profile: Samantha Lu, co-manager of the AB Small Cap Growth Portfolio and co-chief investment officer of small and SMID growth strategies at AllianceBernstein looks for small companies that can grow faster than the market expects, and seeks to minimize the opportunity cost of owning stocks that stumble (top 10 holdings: ETSY, IWO, FIVE, PLNT, TTD, IRTC, OLLI, NGVT, NEWR, LHCG).
European Trader: Positive on RELX: Low-profile giant formerly known as Reed Elsevier—which owns properties as diverse as The Lancet and Comic Con—is transforming itself from a tired media stock into a high-margin tech player leveraging technologies such as artificial intelligence, sending the share price up.
Emerging Markets: Emerging market currencies look undervalued, says Rob Neithart of Capital Group, while inflation is dropping in many places, positioning central banks to cut rates, after having hiked them to defend their currencies.
Commodities: With a more than 30% jump in prices so far this year, rhodium—which is corrosion resistant, is used in catalytic converters and as an electrical contact material—now costs more than twice what gold or palladium do, but hasn’t attracted much attention from investors.
Streetwise: As Americans increasingly turn to streaming, they are paying more for it than cable or satellite—and “If there’s a safe bet in media right now, it’s that the market can’t stay this fragmented, because streaming fatigue isn’t much more appealing than bundle burnout.”
