Barron’s is bullish on Infosys and Medtronics

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names:

Stockwinners offers Barron's review of Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin

 

BULLISH  MENTIONS

Broadcom ‘big run’ not over yet – In a follow up story, Barron’s notes that after Broadcom (AVGO) beat quarterly estimates for revenue and earnings per share estimates and raised its guidance, investors sent the stock almost 4% lower as they believed the beat/raise was less pronounced than those in the past six quarters. However, the publication says Broadcom big run is not over, with the chip maker gaining share in Apple’s (AAPL) new iPhone and cashing in on Arista Networks’ (ANET) success.

Infosys too cheap to ignore – The resignation of Infosys (INFY) CEO Vishal Sikka and board shake-up shed a light on the spat between the board and co-founder Narayana Murthy, concerning governance and future growth, Dimitra Defotis writes in this week’s edition of Barron’s.

However, value investors “don’t need to get mired in the drama,” the publication notes, adding that they should see Infosys stock as too cheap to ignore.

Skeptical investors may be underestimating Medtronic strength– While shares of Medtronic (MDT) have done quite well this year, the performance masks some investors’ doubts that the company can deliver consistent mid-single-digit sales growth, while still meaningfully boosting margins, Lawrence Strauss writes in this week’s edition of Barron’s. The skepticism seems overblown as Medtronic should be able to reach double-digit annual profit growth in the near-term, helped by multiple product launches, one of which automates insulin-dosing for Type 1 diabetes patients, Strauss adds.

Innovations could lift PayPal another 16%– PayPal (PYPL) shares are up 64% since eBay (EBAY) spun off the company two years ago, but despite that rise, the stock still has upside as innovations could lift it another 16%, Emily Bary writes in this week’s edition of Barron’s.

New space age offers promise for investors – SpaceX, a side project of Tesla (TSLA) founder Elon Musk, has grabbed a leading market share in commercial satellite launches, Jack Hough writes in this week’s edition of Barron’s.

Jeff Bezos, founder of Amazon.com (AMZN) and privately owned Blue Horizon, also plans to compete on launches, and has a vision of moving manufacturing to space, Hough noted. However, public investors may be best off staying clear of the upheaval in commercial satellites, and focusing instead on exposure to the U.S. defense and intelligence sectors, Barron’s argued, adding that Goldman Sachs predicts spending there will grow 6% a year, compounded, over the next five years, benefiting names like Boeing (BA), Lockheed Martin (LMT) and Orbital ATK (OA).

Yum China (YUMC) new leaders pushing digital, possible dividend – Yum China shares have received positive reviews from investors, with the stock producing gains of about 40%, Robin Blumenthal writes in this week’s edition of Barron’s. The company has revamped its management group and plans to add more than 15,000 restaurants in the next 15 years, while Pizza Hut unit experiments with new menu items, and KFC pushes ahead some of its successful tactics, such as delivery, digital engagement with customers, and more individualized restaurants, the publication notes. Additionally, Yum China has promised to decide about a dividend by year end, Blumenthal adds.

BEARISH  MENTIONS

Intel future may rest with initiatives that require patience. – The markets where Intel (INTC) dominates, servers and personal computers, do not show the growth they once did, with its future resting with initiatives that are promising, but that, like a start-up, require patience on the part of investors, Tiernan Ray writes in this week’s edition of Barron’s. Intel’s greatest start-up opportunity may be in the realm of computer-data networking, the publication adds.


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Changes to S&P 100 and 500 Indices

S&P announces changes to S&P 100, 500 indices

Stocks to buy, stocks to watch, upgrades, downgrades, earningsS&P Dow Jones Indices will make the following changes to the S&P 100 and S&P 500 indices:

Quintiles IMS Holdings (Q) will replace Whole Foods Market (WFM) in the S&P 500 effective prior to the open on Tuesday, August 29.

S&P 100 & 500 constituent Amazon.com (AMZN) is acquiring Whole Foods Market in a deal expected to be completed on Monday, August 28.

S&P 500 constituent Charter Communications (CHTR) will replace E. I. du Pont de Nemours and Co. (DD) in the S&P 100, and SBA Communications (SBAC) will replace E. I. du Pont de Nemours in the S&P 500 effective prior to the open on Friday, September 1.

S&P 100 & 500 constituent The Dow Chemical Company (DOW) is acquiring du Pont in a deal expected to be completed after the close on Thursday, August 31.

Post-merger, the combined company, which will change its name to DowDuPont and trade under the ticker “DWDP“, will remain in the S&P 100 & S&P 500.

S&P 100 INDEX

The S&P 100 Index is a stock market index of United States stocks maintained by Standard & Poor’s.

Index options on the S&P 100 are traded with the ticker symbol “OEX”. Because of the popularity of these options, investors often refer to the index by its ticker symbol.

The S&P 100, a subset of the S&P 500, includes 102 (because two of its component companies have 2 classes of stock) leading U.S. stocks with exchange-listed options.

Constituents of the S&P 100 are selected for sector balance and represent about 63% of the market capitalization of the S&P 500 and almost 51% of the market capitalization of the U.S. equity markets as of January 2017.

The stocks in the S&P 100 tend to be the largest and most established companies in the S&P 500.

S&P 500 INDEX

The Standard & Poor’s 500, often abbreviated as the S&P 500, or just “the S&P” is an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ.

The S&P 500 index components and their weightings are determined by S&P Dow Jones Indices. It differs from other U.S. stock market indices, such as the Dow Jones Industrial Average or the Nasdaq Composite index, because of its diverse constituency and weighting methodology.

It is one of the most commonly followed equity indices, and many consider it one of the best representations of the U.S. stock market, and a bellwether for the U.S. economy.


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Barron’s is Bullish on Volkswagen, Bearish on Netflix

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue mentions several names.

Stockwinners offers stocks to buy, stocks to watch, upgrades, downgrades, earnings, Stocks to Buy On Margin

BULLISH MENTIONS

Dick’s Sporting seen as ‘bargain in retail’s wreckage’ – Value investors should warm up to Dick’s Sporting (DKS), Jack Hough writes in this week’s edition of Barron’s. While it could be a potential victim of Amazon.com (AMZN) in the long term, weaker sports chains will throw in the towel in the near term, creating cut-rate competition for Dick’s, he notes. Investors who get the timing right on Dick’s stock can profit, Barron’s says.

General Dynamics can still go higher – In a follow-up story, Barron’s writes that General Dynamics (GD) has returned more than 35%, to $198, and it is still valued below its peers. Nonetheless, the stock can go higher as it stands to benefit from new planes, military contracts, and more defense spending, the publication says.

Microsoft could rise 20% in a year – Microsoft (MSFT) has been shifting its decades-old products to the cloud and has shown it can transform itself without injuring its profit margins, Bill Alpert writes in this week’s edition of Barron’s. Additionally, the company has a “vibrant” computer-game franchise, he notes, adding that the company’s shares could rise 20% or more in a year.

Volkswagen could jump 50% – Volkswagen (VLKAY) looks inexpensive, thanks to improving operating performance, the high value of its luxury brands, a lucrative Chinese joint venture, and an attractive truck business, Andrew Bary writes in this week’s edition of Barron’s. Bulls argue that the company’s shares are worth over 50% more of their current price, he notes, adding that one tantalizing idea is a breakup of the company.

BEARISH MENTIONS

Netflix could drop more than 50% – Netflix’s (NFLX) shares could drop more than 50% as Disney (DIS) goes its own way and Amazon (AMZN) looms, Jack Hough writes in this week’s edition of Barron’s. Meanwhile, Facebook (FB) has launched a video service with niche shows covering sports, cooking and more, he points out.

Investors trapped in Teva can use options to get back some money – Teva Pharmaceuticals (TEVA) has recently reported weak earnings, offered dour financial guidance, and cut its dividend by 75%, which are reason to dump the stock, Steven Sears writes in this week’s edition of Barron’s. However, some investors are trapped in the rubble, he notes, adding that investors trapped in the stock can use options to get back some of their money.

United Technologies’ $140/share for Rockwell Collins not a bargain – In a follow-up story, Barron’s writes that reports have surfaced that United Technologies (UTX) is considering buying Rockwell Collins (COL), a move that would strengthen the conglomerate’s portfolio as a supplier to aircraft manufacturers in areas like seats, galleys, and cockpit systems. Some analysts think the price would be $140 a share for Rockwell’s stock, which would be no bargain, the publication says.


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Nvidia Selloff Seen as a Buying Opportunity

Nvidia pullback after Q2 beat called a ‘gift’ by bulls

Nvidia pullback after Q2 beat a buying opportunity. See Stockwinners.com Market Radar for more

Nvidia (NVDA) yesterday reported stronger than expected results but its stock fell as its data center revenue came in below expectations.

Moreover, the beat was seen by many as being driven by the company’s cryptocurrency business, which is generally viewed as quite volatile.

However, a number of firms were upbeat on the stock, with Citi calling the pullback in the shares a “gift” and Jefferies recommending that investors buy the shares on weakness. #Nomura Instinet, a rare bear on the stock, raised its target but still sees the shares having a large amount of downside potential.

BULLISH TAKE

Citi analyst Atif #Malik called the weakness in Nvidia’s stock “a gift,” suggesting that the company’s datacenter business may have been hindered last quarter by the transition to its new Volta chip. Noting that Nvidia expects its revenue from data centers to rise this quarter, the analyst says that the chip maker can “easily” beat the Street’s prior datacenter revenue estimate for the quarter of $466M.

The analyst continues to expect the company to benefit from strength in its datacenter, gaming and auto businesses this year, and he raised his price target on the stock to $185 from $180 while keeping a Buy rating on the shares.

Also upbeat on Nvidia was Jefferies analyst Mark #Lipacis, who recommended that investors buy the stock on weakness.

The company’s datacenter business should resume growing at a “healthy” rate as Volta is evaluated and then adopted by multiple customers, the analyst explained. He continues to expect the company to benefit from the shift to “parallel processing architectures.” Lipacis kept a $180 price target and a Buy rating on the shares.

MORE CAUTIOUS

Stifel analyst Kevin Cassidy called Nvidia’s results “solid,” but he believes that some investors could be disappointed that “much” of the company’s “revenue beat…came from the highly volatile cryto-currency market and not from datacenters’ adoption” of Nvidia’s chips.

Calling datacenter revenue “notoriously lumpy,” the analyst still expects Nvidia’s revenue from data centers to rise 15%-20% annually over the longer term. #Cassidy raised his price target on the shares to $110 from $93 but kept a Hold rating on the stock based on valuation.

#Nvidia reported “impressive” results, and its datacenter business should accelerate as Volta becomes more widely available this quarter, wrote Roth Capital’s Brian #Alger. He said Nvidia’s performance over the past several quarters has made it clear that neither Intel (INTC) nor AMD (AMD) have been able to slow the company’s growth, leaving it “alone” among semiconductor companies in terms of big volume and big dollar growth potential.

However, the analyst “struggles” with predicting that the stock’s current valuation will rise significantly further. #Alger raised his price target on Nvidia to $150 from $120, but kept a Neutral rating on the shares.

RARE BEAR

Nomura Instinet analyst Romit #Shah said Nvidia continues to see “subdued” trends in core PC gaming, minimal gross margin leverage and decelerating revenue and earnings growth. Shah believes shares remain overvalued and reiterates his Reduce rating, though he raised his price target on the stock to $110 from $90.

PRICE ACTION

In Friday morning trading, Nvidia fell 6.9% to $153.45.

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The Fear Index Soars as Stocks Tumble

U.S. VIX Volatility Surges over 30% to clear 15.00

Buying Opportunity for Some Stocks this afternoon

VIX surges over 30% to above 15.00. See Stockwinners.com Market Radar to read more.

U.S. VIX (VIX) equity volatility surged over 30% to briefly clear 15.00 en route to 15.36, a 3-month highs after taking out 15.16 from June 29th, having cleared the 11.98 or its 200-day moving average earlier this week.

The spikes in the VIX represent a market sell-off.

That puts the double top near 16.30 from April/May within reach, ironically after recent rounds of trader layoffs in the financial sector due to persistently low volatility.

A breakout higher amid record speculative VIX short interest could put 23.01 November 2016 and 26.72 from July 2016 in scope.

Pullbacks will eye 11.98 and 11.56 session lows for support, along with all-time lows of 8.84 from July 26.

U.S. VIX equity volatility surges, See Stockwinners.com Market Radar

The S&P 500 (SPX) meanwhile is fast approaching its 2,448.3 or it’s 50-day moving average support line, which has provided investors a buying opportunity for the past several months.

It appears that investors may forgive legislative impasse, but are less generous about a nuclear war!

NASDAQ is off 1.2% and the Euro Stoxx 50 is 1.2% lower.

REBOUND POSSIBLE

Based on the charts show above, we expect the sell-off to continue into late afternoon on Thursday with a recovery into close, followed by a short-covering rally on Friday August 11th. Use this afternoon sell off to buy stocks that should be sold on Friday.

STOCKS TO WATCH

NFLX, EXEL, TTD, XXII, NVDA, AAPL, PEGA, SINA, SQ, USCR, YY.

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RingCentral is For Sale

RingCentral could be acquired for mid $50s per share, says SunTrust 

RingCentral could be acquired for mid $50s per share. See Stockwinners.com Market Radar to read more

After Bloomberg reported that RingCentral (RNG) had hired an adviser after drawing buyout interest, SunTrust analyst Terry #Tillman says the company could be acquired for a price in the mid $50s per share range ” if the company’s value proposition is viewed as a knowledge worker/business productivity platform versus simply business phone systems.”

The analyst recommends that investors focused on the company’s fundamentals own the stock. “based on strong top-line growth and expanding margins and cash flow.”

RingCentral could attract interest from technology-focused private equity firms and other cloud-based software providers, two of the people said. RingCentral may choose not to proceed with a deal, the people said, asking not to be identified as the details aren’t public.

RingCentral last week reported second-quarter revenue of $119.4 million, up 30 percent from the same period a year ago.

The company, which went public in 2013, runs a platform that connects devices for corporate clients, allowing them to link employees’ smartphones, tablets, desktop computers and landline telephones to communicate via voice, text and fax.

It generates most of its revenue from subscriptions, including those sold through resellers including AT&T Inc.

Note that Stockwinners featured RNG at $36.50 and closed the position at $42 yesterday.

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Cognizant Higher as Immigration Reform Dies Down

Easing immigration reform worries seen as boost for Cognizant

Cognizant Higher as Immigration Reform Dies Down. See Stockwinners.com Market Radar to read more.

Research firm Berenberg upgraded Indian IT outsourcing company Cognizant (CTSH) to Buy from Hold, saying that the stock is poised to rise because investors have become less worried about the company being hurt by immigration reform.

EASING WORRIES

Noting that Cognizant’s stock has rallied recently, Berenberg analyst Georgios #Kertsos says the surge indicates that investors are less worried that Cognizant could be hurt by immigration reform. The longer it takes Congress to enact immigration reform, the better positioned Cognizant will be since it is reducing its reliance on foreign workers by hiring more employees who are already in the U.S., Kertsos added.

Meanwhile, Kertsos is upbeat about the company’s decision to expand its consulting business, saying that this strategy will increase the company’s addressable market and “drive sustainable top-line performance.” He raised his price target on the stock to $85 from $65.

LOOP MORE BULLISH TOO

On August 4, Loop Capital analyst Joseph Vafi upgraded Cognizant to Buy from Hold. “Demand headwinds” that had been hurting the company are easing, while the company “has ample room” to meet its 2019 margin target, wrote Vafi, noting that its margins are currently below those of its peers.

Easy comparisons should help the company’s earnings per share growth begin to accelerate at the end of this year, potentially enabling its multiple to rise slightly, according to the analyst. He raised his price target on Cognizant shares to $83 from $63.

PRICE ACTION

In Tuesday trading, Cognizant added 0.7% to $70. Shares have a 52-week trading range of $45.44 – $71.57.

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ShoreTel Sold for $530 Million

Mitel announces agreement to acquire ShoreTel for $7.50 per share in cash

 

Mitel announces agreement to acquire ShoreTel for $7.50 per share in cash. See Stockwinners.com for stocks to watch, stocks to buy, stocks to trade

Mitel (MITL) and ShoreTel (SHOR) announced that they have entered into a definitive merger agreement pursuant to which Mitel will acquire 100% of the outstanding shares of ShoreTel common stock in an all-cash transaction at a price of $7.50 per share, or a total equity value of approximately $530 million and a total enterprise value of approximately $430 million.

ShoreTel, Inc. provides business communication solutions for small and medium sized businesses. The company offers integrated voice, video, data, and mobile applications based on Internet protocol technologies. It offers various solutions, such as ShoreTel Voice Switches; ShoreTel Service Appliances for messaging, conferencing, and collaboration applications

The purchase price represents a 28% premium to ShoreTel’s closing share price on July 26, 2017.

The combined company will be headquartered in Ottawa, Canada, and will operate as Mitel. Rich McBee, Mitel’s Chief Executive Officer, will lead the combined organization. Steve Spooner, Mitel’s Chief Financial Officer, will also continue in that role.

Financial highlights of the transaction include: Combined sales of $1.3 billion; Increases Mitel’s total recurring revenue to 39% of total revenue; More than doubles Mitel’s UCaaS revenue to $263 million; Significant synergy opportunity targeted at $60M in annual run rate spend expected to be achieved over two years; Expected to be accretive to non-GAAP EPS in the first year.

Mitel intends to finance the consideration for the acquisition and associated transaction expenses using a combination of cash on hand from the combined business, drawings on its existing revolving credit facility and proceeds from a new fully underwritten $300 million term loan maturing in 2023.

The transaction is expected to be completed in the third quarter of 2017, subject to ShoreTel stockholders having tendered shares representing more than 50% of the outstanding shares of ShoreTel common stock, certain regulatory approvals having been obtained and other customary conditions to the tender offer having been satisfied.

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