Barron’s is Bullish on Leucadia, Sarepta and Flex, Bearish on Fiberoptic Makers, Retail

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue is bullish on several names. They include:

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Flex could rise 25% in a year – Flex (FLEX) is using robotics, machine learning, three-dimensional printing, and other next-generation technologies to transform itself into an everything factory, able to turn out not just consumer electronics but also medical equipment, sneakers, and car components, Jack Hough writes in this week’s edition of Barron’s. While the company’s business mix is changing, it still has ample exposure to PCs and smartphones, as well as companies like Apple (AAPL) and Lenovo (LNVGY), the report noted, adding that it expects Flex’s stock to rise another 25% or more over the coming year.

Leucadia shareholders to ‘finally’ see reward – Five years after Leucadia National (LUK) announced its merger with Jefferies Group, the combined company, and its shares, seem poised to prosper, Leslie Norton writes in this week’s edition of Barron’s. Despite an initial burst from $21 to $31 in the year following the deal, the shares succumbed shortly thereafter to the drop-in oil prices and oil-related junk bonds, which hurt Jefferies’ commodities and bond units, the publication noted, adding that both businesses have since revived, with some investors believing its shares could be worth $30 or more.

Aviation, defense stocks have ‘juicy yields – Some aerospace and defense stocks sport “nice yields,” not to mention impressive total returns in recent years, and “good opportunities” exist in companies that overlap like Boeing (BA), Lawrence Strauss writes in this week’s edition of Barron’s. Alongside Boeing, the report highlighted the yields of Lockheed Martin (LMT), United Technologies (UTX), Raytheon (RTN), L3 Technologies (LLL), General Dynamics (GD), Northrop Grumman (NOC) and Rockwell Collins (COL).

Upbeat sales news, guidance boost lift Sarepta shares – Sarepta’s (SPRT) shares surged last week after the company reported stronger than expected U.S. sales of its drug for Duchenne muscular dystrophy, or DMD, in the second quarter, while raising sales guidance for the year, Andrew Bary writes in this week’s edition of Barron’s. There could be more upside in the shares because of the significant sales potential for its DMD drug, Exondys 51, the report noted, adding that Sarepta looks like one of the “most promising smaller biotech companies.”

BEARISH NAMES

Amazon, others could be threat to fiberoptic markers – Amazon.com (AMZN), Alphabet (GOOGL;GOOG), Microsoft (MSFT), Apple (AAPL), and Facebook (FB) have all become the biggest and most important buyers of tech gear, with their influence changing the way fiberoptic components are being manufactured and distributed, Tiernan Ray writes in this week’s edition of Barron’s. The pace is so intense, and supplies have gotten so tight, that Amazon is bypassing traditional vendors and manufacturing the parts itself, the report note, adding that this could threaten companies like Applied Optoelectrics (AAOI), Lumentum (LITE) and Oclaro (OCLR) if other big techs follow. See Stockwinners’ blog about fiberoptic names.

Nothing is ‘Amazon-proof’  – Amazon’s (AMZN) deal with Sears (SHLD) to sell Kenmore appliances caused shares of Home Depot (HD), Lowe’s (LOW) and Best Buy (BBY) to tumble, Ben Levisohn writes in this week’s edition of Barron’s. Brick-and-mortar retailers like Macy’s (M) and Kohl’s (KSS) were the first victims of the rise of online shopping, while this year retailers once thought immune to the impact like O’Reilly Automotive (ORLY) and Advance Auto Parts (AAP) followed suit, the report noted, adding that when Amazon agreed to buy Whole Foods Market (WFM), it also caused shares of Kroger (KR) and Costco (COST) to sell off. “Nothing is Amazon-proof,” Levisohn argued.

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Stocks to Watch for Today-Homebuilders Down as Lumber Prices Spike

Homebuilder sentiment falls to eight month low as lumber prices spike

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Shares of U.S. homebuilders are all trading lower after a key metric for the group missed expectations.

HOME BUILDER SENTIMENT

The Housing Market Index ( #HMI ) is based on a monthly survey of #NAHB members designed to take the pulse of the single-family housing market. The survey asks respondents to rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes.

Builder confidence for newly-built single-family homes dropped to its lowest level since before the Trump election. The confidence metric slipped two points in July to 64.

The HMI measure of current sales conditions has been at 70 or higher for eight straight months, indicating strong demand for new homes,” said NAHB Chief Economist Robert Dietz.

“However, builders will need to manage some increasing supply-side costs to keep home prices competitive.” “Home builders are troubled due to the increasing costs of material, in particular lumber,” said NAHB Chairman Granger MacDonald. The situation is impacting housing affordability even as consumer interest purchasing a new home is strong.

CANADIAN LUMBER TARIFFS

In June, commerce secretary Wilbur Ross proposed new lumber tariffs adding to the previous tariffs proposed by the Trump administration on Canadian softwood lumber imported into the U.S. That type of lumber is used to build U.S. homes.

Back in June, NAHB Chair MacDonald said adding the new tariffs “to the proposed 20% countervailing lumber duty that the Trump administration slapped on imports of lumber this spring means that total tariffs would be a whopping 27%.”

Publicly traded companies in the space include Beazer Homes (BZH), D.R. Horton (DHI), Hovnanian (HOV), KB Home (KBH), Lennar (LEN), PulteGroup (PHM), and Toll Brothers (TOL). Shares of construction materials vendors are also lower, including Vulcan (VMC), Martin Marietta Materials (MLM), Eagle Materials (EXP), US Concrete Inc (USCR), and Beacon Roofing Supply (BECN).

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Stock Upgrades Downgrades for July 18, 2017

Stockwinners’ analysts upgrades, downgrades and initiations for July 18, 2017

Everyday, we will e-mail our readers a list of analysts actions as shown below. Please see below on how to sign up for Stockwinners’ Service.

 

STOCK UPGRADES

CMG Chipotle to Buy from Hold at Maxim
CMG Chipotle to Buy on queso launch at Maxim
IPXL Impax to Neutral from Underweight at Piper Jaffray
MMP Magellan Midstream to Buy from Neutral at UBS
NFLX Netflix to Buy from Neutral at Rosenblatt
OAS Oasis Petroleum to Buy from Hold at Williams Capital
ORLY O’Reilly Automotive to Buy from Neutral at Northcoast
QDEL Quidel to Outperform from Market Perform at William Blair
SC Santander Consumer to Outperform from Market Perform at JMP Securities
SEAS SeaWorld to Neutral from Sell at Goldman Sachs
SEDG SolarEdge to Outperform at Oppenheimer
SEDG SolarEdge to Outperform from Perform at Oppenheimer
SKX Skechers to Positive from Mixed at OTR Global

DOWNGRADES

ADP ADP to Equal Weight from Overweight at Barclays
CCJ Cameco to Underperform at Credit Suisse
COG Cabot Oil & Gas to Hold from Buy at Williams Capital
DDC Dominion Diamond to Market Perform from Outperform at BMO Capital
DDC Dominion Diamond to Hold from Buy at Gabelli
DNN Denison Mines to Underperform from Neutral at Credit Suisse
EXLS ExlService to Neutral from Buy at Citi
FMC FMC Corporation to Neutral from Buy at Seaport Global
FPI Farmland Partners to Market Perform from Outperform at FBR Capital
IPGP IPG Photonics to Hold from Buy at Canaccord
NYLD NRG Yield to Hold from Buy at Deutsche Bank
OAS Oasis Petroleum to Hold from Buy at Deutsche Bank
OAS Oasis Petroleum to Hold at Deutsche Bank
QEP QEP Resources to Hold from Buy at Deutsche Bank
SSL Sasol to Neutral from Overweight at JPMorgan
UAA Under Armour to Negative from Mixed at OTR Global

STOCK INITIATIONS

DC Agree Realty with a Buy at Canaccord
ADRO Aduro Biotech with an Outperform at Cowen
ALBO Albireo Pharma with a Buy at Needham
BFAM Bright Horizons with a Buy at Citi
BHGE Baker Hughes resinstated with a Sell at Goldman Sachs
CVNA Carvana with a Neutral at Wedbush
FANG Diamondback Energy with an Outperform at Imperial Capital
FCPT Four Corners Property Trust with a Hold at Canaccord
GOOD Gladstone with a Hold at Canaccord
GPMT Granite Point Mortgage with an Overweight at JPMorgan
GPMT Granite Point Mortgage with a Market Perform at Keefe Bruyette
GTY Getty Realty with a Buy at Canaccord
INFN Infinera with a Buy at Craig-Hallum
MSCI MSCI with an Equal Weight at Barclays
MTDR Matador with an Outperform at Imperial Capital
O Realty Income with a Buy at Canaccord
OMF OneMain Holdings with a Buy at DA Davidson
REN Resolute Energy with an Outperform at Imperial Capital
RM Regional Management with a Neutral at DA Davidson
TAL TAL Education with a Neutral at Citi
TWOU 2U with a Buy at Citi
WPX WPX Energy with an Outperform at Imperial Capital

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Barron’s is Bullish on Adidas, Cisco, Whirlpool and Gilead

Barron’s, the weekly publication owned by the Wall Street Journal, in its latest issue is bullish on several names. They include:

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Adidas could double as profit margins expand, Barron’s says – Despite the nearly 40% run up in the past 12 months, adidas (ADDYY) shares still have significant upside, particularly if the company can make good on its goal of achieving the lofty profit margins of rival Nike (NKE), Victor Reklaitis writes in this week’s edition of Barron’s, citing portfolio managers for European equities at Hermes Investment Management.

Vertex, Gilead seen as innovators, Barron’s says – Jason #Kritzer and Samantha Pandolfi, co-managers of Eaton Vance Worldwide Health Sciences fund, believe it is “a great time” to invest in the health care sector, with a lot of innovation under way by drugmakers, medical-device companies and companies developing technologies used to deliver health care, Johanna Bennett writes in this week’s edition of Barron’s. Eaton Vance finds innovation in Vertex (VRTX), Zoetis (ZTS), and Gilead (GILD), publication notes.

Visteon rally far from over, Barron’s says – In a follow-up story, Barron’s tells readers that while shares of Visteon (VC) are up sharply this year, due to the popularity of the company’s auto electronics, the stock could have more room to run. Rapid earnings growth could power Visteon’s shares to $116 from $105, and a deal could lift them even higher, the publication notes, adding that potential buyers include nontraditional auto plays, such as Apple (AAPL) and Alphabet (GOOGL; GOOG), which are developing driverless cars.

Cisco seems undervalued as future looks brighter, Barron’s says – Seen as “Old Tech,” Cisco (CSCO) seems overlooked, while Verint Systems appears overvalued, Vito Racanelli writes in this week’s edition of Barron’s. With its 3.7% dividend yield, the former could be just “the ticket for a healthy-double-digit annual return” with somewhat low downside over the next 24 months, the publication notes.

Trade policy may favor some Americans over others, Barron’s say – Steel tariffs and import restrictions may secure profits for steel mills and employment for steel workers, but will inevitably drive up the cost of any product, Thomas Donlan writes in this week’s edition of Barron’s, noting that other American companies are the customers of the U.S. steel industry and protectionism will not put them first. While protecting steel is supposed to solidify national defense, protectionism actually “hardens the economic arteries of commerce,” Donlan added. Companies that may be impacted by Trump’s potential steel tariffs include U.S. Steel (X), AK Steel (AKS), Nucor (NUE), Steel Dynamics (STLD), ArcelorMittal (MT), Alcoa (AA), and Century Aluminum (CENX).

Whirlpool could rise 35% next year, Barron’s says – Whirlpool (WHR) is a “cash machine” for shareholders, and despite coping with the aftermath of the U.S. housing crisis, price competition from South Korean rivals, and troubled markets like Brazil, the maker of washers, dryers, dishwashers, ovens, and refrigerators has more than doubled earnings since 2012, Robin Goldwyn Blumenthal writes in this week’s edition of Barron’s. The shares remain cheap, the publication noted, but the stock may be worth about $260 a share, or 35% higher, if Whirlpool can continue to execute well in the year ahead.

Orion Engineered aiming for continued gains, Barron’s says – The carbon-black market is growing twice as fast as the commodity business and is more profitable, Nicholas #Jasinski writes in this week’s edition of Barron’s. Orion Engineered (OEC) is the smallest of the three key global players, after Cabot (CBT) and Aditya Birla, but is the largest in the specialty carbon-black market, and “a little gem hiding in all of this black dust,” the publication noted. Orion’s long-term relationships with customers give the company the bargaining power to negotiate contracts indexed to the cost of carbon black’s main input, namely oil, the report added.

Bearish Names

Premium video on demand may pressure movie-theater operators, Barron’s says – This year, stocks of AMC Entertainment (AMC), Regal Entertainment (RGC) and Cinemark (CNK) have declined due to a “mediocre” summer box office on franchise fatigue, more beguiling choices on Netflix (NFLX) or Amazon (AMZN), and as technology is changing people shop, Kopin Tan writes in this week’s edition of Barron’s. Studios and distributors like Comcast’s (CMCSA; CMCSK) Universal Pictures or Walt Disney (DIS) are now debating how to roll out “premium video-on-demand,” which lets viewers watch a movie within a day to 50 days after it hits the big screen, the publication adds, pointing out that while this can benefit the studios, theaters will have much to lose.

Verint looks overvalued given performance, Barron’s says – Riding the “tech momentum” but looking overvalued, Verint Systems weakening track record over the past four years suggests that investor enthusiasm is misplaced, Vito Racanelli writes in this week’s edition of Barron’s. Verint Systems (VRNT) does not look like a tech company with sustainable growth, with its revenue growth dropping steadily, the report notes.

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Rig Count Unchanged!

Baker Hughes reports U.S. rig count unchanged at 952 rigs

Oil Should Rise on the News

Oil Rigs, See Stockwinners.com Market Radar to read the latest on oil and rig count

Baker Hughes, a GE Company (BHGE) reports that the U.S. rig count is unchanged from last week at 952, with oil rigs up 2 to 765 and gas rigs down 2 to 187.

The U.S. Rig Count is up 505 rigs from last year’s count of 447, with oil rigs up 408, gas rigs up 98, and miscellaneous rigs down 1 to 0.

The U.S. Offshore Rig Count is unchanged from last week at 21 and down 1 rig year over year.

The Canadian Rig Count is up 16 rigs from last week to 191, with oil rigs up 1 to 106 and gas rigs up 15 to 85.

The Canadian Rig Count is up 96 rigs from last year’s count of 95, with oil rigs up 62, gas rigs up 35, and miscellaneous rigs down 1 to 0.

Note that Baker-Hughes was recently purchased GE. Also note that stock symbol has changed to BHGE.

Class A common stock of Baker Hughes, a GE company began trading on the New York Stock Exchange under the symbol BHGE on July 5, 2017. Shares of common stock of Baker Hughes Inc. (BHI) stopped trading on July 3rd.

 

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Nerf Sold for $1.2 Billion

Neff Corporation sold for $21.07 per share

Neff Corp sold for $1.2 Billion. See Stockwinners.com Market Radar to read more.

H&E Equipment Services, Inc. (HEES) and Neff Corporation (NEFF) today announced that they have entered into a definitive merger agreement under which H&E Equipment Services (“H&E”) will acquire Neff Corporation (“Neff”).

Neff Corporation operates as an equipment rental company in the United States. The company offers earthmoving equipment, including excavators, backhoes, loaders, bulldozers, mini-excavators, trenchers, sweepers and tractors, track loaders, and skid steers; and material handling equipment comprising reach forklifts, industrial forklifts, and straight-mast forklifts.

Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, H&E will pay $21.07 in cash per share of Neff common stock, for a total enterprise value of approximately $1.2 billion, including approximately $690 million of net debt.

The per share merger consideration payable to Neff stockholders is subject to certain downward adjustments, not to exceed $0.44 per share, in the event that H&E incurs certain increased financing costs due to the transaction not being consummated on or prior to January 14, 2018.

The transaction is expected to close in the late third quarter or early fourth quarter of 2017, and is subject to customary closing conditions including Hart-Scott-Rodino Act clearance.

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