Saturday, April 13, 2019

Barrons weekend summary

Barrons weekend summary: positive cover story on CVS; positive features on CVX, ALC, PINS 
Cover story: CVS plans to expand its HealthHUB locations nationwide, making healthcare simpler and more local, part of the company’s plan to become the “new front door of health care”; Now that it has acquired Aetna, CVS is “deeply entangled in how medicine and care are administered, priced, and paid for, and how the government’s role might change”; Its assets “leave it uniquely well positioned for a future when consumers gain more control over health care, and prices fall. Time to buy the shares.” 

Features: 1) Todd Boehly’s Eldridge Industries has produced everything from annuities through its insurer to a stock it successfully spun off into the market for retail investors—the simple version of his method “is that he builds a box and then puts assets in it”; 2) Positive on Pinterest: Bulletin-board startup has an attractive high-growth business, is close to profitability, and, most important, appears willing to price the deal to sell—a form of restraint that could pay off in a sector where unicorns feel pressure to aggressively price IPOs; 3) Positive on ALC: World’s leading eye-care company, recently spun off from NVS, should be able to improve operations and financial results now that it’s independent, and investors should “raise their sights on the stock” despite its high valuation; 4) Positive on CVX: Wall Street has punished the energy giant for its move to acquire APC, but the logic of the deal makes sense, because Anadarko’s oil assets are in regions where Chevron already has a foothold, and will allow it to gain scale in crucial areas. 

Tech Trader: Positive on EA, ATVI, TTW: So-called loot boxes—treasure chests that gamers either earn through game play or buy with digital currency by spending real money—have long generated billions in high-margin profits for gaming companies, but regulators are taking a closer look, and critics say it’s akin to gambling for young people. 

Trader: The 10-year Treasury yield rose 0.057 percentage point to 2.56% this past week, its highest in nearly a month—a sign the yield curve, which briefly inverted three weeks ago, is no longer signaling a recession, at least for now; Cautious on DIS: Disney is poised for a good year with its core businesses, and the stock could continue to rise, but the long-term outlook is much cloudier; “Maintaining guidance for the full year after a weaker first quarter means companies are predicting a re-acceleration of earnings to growth later in 2019—that’s effectively a higher bar, and could mean disappointment for investors later on if earnings trends don’t reverse.”

Interview: Karina Funk, co-manager of the Brown Advisory Sustainable Growth fund, believes that companies that embed sustainability in their business can provide compelling customer value (picks: Danaher, TMO, AZPN, BLL). 

Profile: Aram Green, manager of ClearBridge Select, which invests in young, disruptive companies as well as those that have durable growth prospects (top 10 holdings: NOW, SBAC, SHOP, ROST, CSOD, MELI, AAP, WIX, CPRT, SYNH). 

European Trader: The UK has emerged as the top global location to support autonomous vehicles, according to a new analysis conducted by the Society of Motor Manufacturers and Traders, and the sector could generate $81.1B annually by 2030. 

Emerging Markets: Saudi Aramco’s bond debut “was more than a feeding frenzy for yield-starved fixed-income managers. It lifted the curtain on the secretive monopoly’s finances, which look impressive,” showing it to be the world’s most-profitable corporation. 

Commodities: “Silver has been a lackluster performer this year, but as investors’ appetite for gold improves silver might share in the yellow metal’s prosperity.”