Barron’s is bullish on Facebook, bearish on GE

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

Cummins, United Technologies good industrial bets – Cummins (CMI), United Technologies (UTX), Honeywell (HON), Ingersoll-Rand (IR) and Illinois Tool Works (ITW) boast good dividends that should rise, Lawrence Strauss writes in this week’s edition of Barron’s.

Facebook still looks like a buy – In a follow-up story, Barron’s says that Facebook’s  (FB) political-advertising imbroglio has obscured some very good revenue news. Slowing supply growth helped drive up demand and prices for Facebook ads, marking a reacceleration of growth, the report notes, adding that the company is also coming up with innovative ways to cash in on booming interest in video and creating new ad opportunities on its Messenger and Instagram platforms.

Kohl’s updated return policy raises Amazon takeover questions – Following Kohl’s (KSS) announcement that Amazon (AMZN) purchases could be returned at its stores in Chicago and Los Angeles, some have questioned if the e-Commerce giant is planning to buy the retailer, Steven Sears writes in this week’s edition of Barron’s. Citing Madison Global Partners’ Bernard Sosnick, the publication said Amazon may be testing the merits of owning a retailer that can build private-label products to showcase Amazon devices and services, with the holiday season to test the theory further.

May be time to play Mattel – Mattel (MAT) is half the stock it used to be, but the maker of Barbie and Hot Wheels knows it has a problem, Ben Levisohn writes in this week’s edition of Barron’s. Management said it would target $650M in cost cuts through 2019, while also enacting initiatives to reduce unpopular products and create new ones to help boost sales, and if it works, Mattel could be a winner, he adds.

Upside ahead for smaller companies – As tech giants soar and as the rally favors the biggest companies, there may be upside on deserving, smaller companies, such as AMD (AMD), Impinj (PI) and Everspin Technologies (MRAM), Tiernan Ray writes in this week’s edition of Barron’s. Meanwhile, companies such as Finisar (FNSR), Lumentum (LITE), Viavi (VIAV), Oclaro (OCLR), Applied Optoelectronics (AAOI), Inphi (IPHI), and NeoPhotonics (NPTN) are grappling with a slowdown in spending in China, but are “back for real,” he argues.

Intel AI push to boost growth – Artificial intelligence has been perceived to be a threat to Intel’s (INTC) decades-long dominance in computer chips, but its shares are up 30% this year, maybe due to third quarter earnings or maybe due to its plans to release a new line of A.I. chips developed in collaboration with Facebook (FB), and as the company’s purchase of Mobileye makes it an early leader in autonomous driving, Jack Hough writes in this week’s edition of Barron’s, adding that he still sees more upside ahead.

IBM, Google among potential AI winners – After decades of development, Artificial Intelligence-style computing now works, and its impact will spread far beyond board games such as Go or chess, Bill Alpert writes in this week’s edition of Barron’s. Citing Wells Fargo analyst Ken Sena, the report says the biggest beneficiaries will be the firms pioneering the technology, with machine learning already powering search suggestions of Google (GOOG; GOOGL) and Microsoft (MSFT), chatbots like Amazon’s (AMZN) Alexa, and the recommendations at Facebook (FB), and Netflix (NFLX). Given China’s vast size, the analyst also has similar outperformance expectations for Alibaba (BABA), Baidu (BIDU), JD.com (JD), and Tencent (TCEHY), Barron’s adds.

BEARISH  MENTIONS

Powerful bearish trend in General Electric – Investor’s confidence has eroded and General Electric’s (GE) stock price is at 2012, with a powerful bearish trend, Michael Kahn writes in this week’s edition of Barron’s. But while it may look like a bargain and the stock could be the buy of the decade, Kahn argues that he still needs to see the market give him either an unambiguous selling climax, or a strong upside reversal. If not for inertia, most investors would probably have already sold their shares of General Electric, but they may be persuaded as early as November 13, when its new leader, John Flannery, holds an investor day meeting, Steven Sears writes in this week’s edition of Barron’s. However, he notes that it is difficult to know how investors will react to whatever is announced at the meeting. If GE releases a draconian restructuring plan, shares could rally as investors reason that all of the bad news is out of the way, but if they lack confidence in Flannery’s approach, the stock could trade sharply lower, Barron’s adds.

Sell Under Armour as troubles ‘run deep.’  – In a follow-up story, Barron’s says that despite the skid in Under Armour (UA) shares, the sportswear company faces continuing woes, from a shift to lifestyle garments to the internet. Further, the publication notes that there seems little reason to hold shares through the holidays in hopes of a rebound.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

Barron’s is bullish on biotechs, Target

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

Local Chinese consumer plays to have significant advantages – China’s 19th Communist Party Congress gave expanded powers to President Xi Jinping to wield in a second five-year term as the country’s leader, endorsing the continued shift of China’s economy toward domestically focused consumer goods and services, which should be bullish for stocks such as Alibaba (BABA) and China Life Insurance (LFC), John Kimelman and Assif Shameen write in this week’s edition of Barron’s. Meanwhile, U.S. companies with footholds in the country’s consumer markets can expect to face regulatory and other roadblocks in the years ahead, they add.

Biotech selloff creates buying opportunity for investors – Biotech companies are not looking that healthy, with Amgen (AMGN), Biogen (BIIB), Celgene (CELG), and Gilead Sciences (GILD) all offering disappointments of one kind or another, but the selloff has created a buying opportunity for investors, Ben Levisohn writes in this week’s edition of Barron’s. Biotech looks like a victim of high expectations and could be ready to run again, he adds.

Tech giants continue to exploit their dominance – The latest earnings, particularly from Amazon.com (AMZN), Alphabet (GOOGL; GOOG), and Microsoft (MSFT), show that tech giants continue to exploit their dominance to Wall Street’s amazement, Tiernan Ray writes in this week’s edition of Barron’s. All three are examples of network effects, the ability of a business to exploit its position in a kind of virtuous cycle, and the payoff continues to astound Wall Street, he adds, noting that Apple (AAPL) is expected to report earnings this Thursday.

Playing double-up strategy with GE worth considering – General Electric (GE) stock is down 34% this year and seems poised to trade even lower amid fears that it may cut its dividend, Steven Sears writes in this week’s edition of Barron’s. While Sears has profitably recommended wagering against the stock since May, and still thinks bearish trades make sense, he recognizes that many investors feel stuck with their GE holdings and are not sure what to do. The “humble double-up strategy” is worth considering for anyone who wants to maintain ownership of the stock, and also realize a tax loss, he argues.

Target shares could return up to 30% amid renovation – Target’s (TGT) missteps have cost the company $15B in stock-market value over the past three years, Vito Racanelli writes in this week’s edition of Barron’s. The retailer is now remodeling stores, cutting costs and ramping up its online business to combat Amazon (AMZN), and store traffic and earnings look poised to rise in coming years, which could lead to an upward revaluation of the shares, he adds.

May be ‘lots to be gained’ from CVS/Aetna possible tie-up – In a follow-up story, Barron’s says that while CVS Health (CVS) shares were under pressure following a report by The Wall Street Journal saying the company and Aetna (AET) were in talks, there is “lots to be gained from a tie-up.” By securing better drug pricing from CVS than it gets now, Aetna stands to win more health-plan customers, and it can send many of them to CVS for drugs but also for care, the report explains, adding that the deal would help transform CVS into a company that also profits from health outcomes. Further, Barron’s argues that it could help protect it from future changes in health-care law, and from losing sales to Amazon (AMZN).

Enterprise Products Partners promises growth, income – Enterprise Product Partners (EPD) is a leader among U.S. energy master limited partnerships but its units are depressed like those of many peers, with investors worrying about slowing growth, competitive pressures, weak energy prices and cuts or moderating gains in distributions, Andre Bary writes in this week’s edition of Barron’s. However, he argues that compared with other MLPs, Enterprise has better corporate governance and a stronger sheet, offering an “enticing yield” of nearly 7% and a good growth outlook that investors should see as a “winning combination.”

Apple iPhone X may be catalyst for Sony – Long ago considered a rival of sorts for Apple (AAPL), Sony (SNE) has instead emerged as one of its key suppliers, but its stock is up just 10% over the past six months, while other suppliers have seen their shares almost double in the same period, Assif Shameen writes in this week’s edition of Barron’s. Sony supplies iPhone X’s12-megapixel camera, as well as state-of-the-art 3-D sensors designed to boost iPhone’s Face ID and augmented-reality capabilities, he adds, noting that Jefferies analyst Atul Goyal believes these attributes merit a re-rating for the shares, which he thinks can rise at least 40%.

Shire bear case may be too extreme – While Shire (SHPG) has struggled against generic pressures and rising competition, the bear case may be too extreme, Victor Reklaitis writes in this week’s edition of Barron’s.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

GE Disappoints!

GE shocks with ‘unacceptable’ results, guidance cut

GE gets $15B contract from Saudi Arabia

Shares of General Electric (GE) are lower in Friday’s  trading after the company reported quarterly profit that missed consensus estimates by 20c per share.

GE also cut its outlook for fiscal 2017 as new CEO John Flannery called the results “unacceptable.”

MISS AND CUT

GE this morning reported third quarter industrial operating earnings per share of 29c excluding restructuring charges, missing analysts’ estimates of 49c.

Total revenue for the quarter was $33.47B, which beat analysts’ expectations of $32.56B.

The company said that while the majority of its business units had “solid” earnings performance, “this was offset by a decline in Power performance in a difficult market.” “This was a very challenging quarter,” CEO John Flannery said.

Looking ahead, GE cut its FY17 EPS view to $1.05-$1.10 from $1.60-$1.70, well below estimates of $1.53.

“We are focused on redefining our culture, running our businesses better, and reducing our complexity,” Flannery added.

EXECUTIVE COMMENTARY

On GE’s earnings call, Flannery said the results were “unacceptable to say the least” and that while there are many areas of strength at the company, “it’s clear we need to make some major changes.”

Flannery said GE is doing “deep dives” on all aspects of the company, adding that “everything is on the table and there have been no sacred cows.” The company has started to outline its restructuring plans, saying it plans to exit more than $20B of its businesses in the next one to two years, but noted that the dividend is a “priority.”

STRATEGY UPDATE UPCOMING

GE is planning to update its company strategy and 2018 framework on November 13. Flannery has already been cutting jobs, research operations and corporate jets and cars.

PERSONNEL CHANGES

GE has also undertaken personnel changes, including the earlier-than-expected retirement of Chairman Jeff Immelt. According to a spokeswoman, “[Immelt felt Flannery] is prepared to be chairman and CEO now and leaving GE allows him to look at opportunities outside the company.”

Additionally, on October 6, GE said CFO Jeff Bornstein would leave the company on December 31 and will be succeeded by GE Transportation CEO Jamie Miller.

Bornstein said on today’s earnings call that GE was not “living up to our own standards or investor standards and the buck stops with me.”

Earlier this month, GE announced the election of Trian Fund’s Ed Garden to its board to replace Robert Lane, who is retiring. Trian’s Nelson Peltz said he had pushed to get Garden on GE’s board to “bring a fresh mindset.”

‘SHOCKING’ RESULTS

Deutsche Bank analyst John Inch called GE’s weaker than expected Q3 results this morning “shocking,” noting that the company “falls well short” of generating enough cash to pay its $8B common dividend from operations, which raises the prospects of a pending dividend cut and/or raising financial leverage to pay for the dividend. He has a Sell rating and $21 price target on GE shares.

Meanwhile, Citi analyst Andrew Kaplowitz said the earnings report indicates that the mounting challenges developing over time in the Power business now appear to be fully materializing. Kaplowitz, who has a Buy rating and $31 price target on GE, thinks shares could potentially be approaching a bottom.

PRICE ACTION

GE shares are down about 3%  at $22.72, improving quickly from their opening lows. The early drop pushes the stock’s year-to-date losses to nearly 30%. Shares have a 52-weeks trading range of $22.10 – $32.38.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

Honeywell to reorganize itself

Honeywell announces planned portfolio changes

Honeywell to reorganize itself. See Stockwinners.com for details

Honeywell (HON) announced the results of its comprehensive portfolio review, including its intention to separately spin off its Homes product portfolio and ADI global distribution business, as well as its Transportation Systems business, into two stand-alone, publicly-traded companies.

The planned separation transactions are intended to be tax-free spins to Honeywell shareowners for U.S. federal income tax purposes and are expected to be completed by the end of 2018.

“Today’s announcement marks the culmination of a rigorous portfolio review involving a detailed assessment of every Honeywell business. As part of that review, we analyzed numerous criteria, including growth outlook, financial performance, market dynamics, potential for disruption, and, most importantly, assessment of fit as a Honeywell business,” said Honeywell President and CEO Darius Adamczyk.

“The remaining Honeywell portfolio will consist of high-growth businesses in six attractive industrial end markets, each aligned to global mega trends including energy efficiency, infrastructure investment, urbanization and safety.

These businesses are best positioned to leverage Honeywell synergies from our technologies, financial and business models, and talent. Our simplified portfolio will offer multiple platforms for organic growth and margin expansion through further deployment of our world-class HOS Gold operating system and the Honeywell Sentience Platform.

Honeywell will also have multiple levers for continuing to execute an aggressive capital deployment strategy, including a vigorous and disciplined M&A program.

“The spun businesses will be better positioned to maximize shareowner value through focused strategic decision making and capital allocation tailored for their end markets,” Adamczyk said.

“At Honeywell, we will continue our track record of execution, delivering growth, margin expansion, and aggressive capital allocation for our shareowners.”

The new Homes and Global Distribution business will be a leader in the home heating, ventilation and air conditioning, or HVAC, controls and security markets, and a leading global distributor of security and fire protection products. The business is expected to have annualized revenue of approximately $4.5B, a high-yield credit rating, approximately 13,000 employees, and financial responsibility for certain Honeywell legacy liabilities.

The new Transportation Systems business will be a global leader in turbocharger technologies with best-in-class engineering capabilities for a broad range of engine types across global automobile, truck and other vehicle markets.

The business is expected to have annualized revenue of approximately $3B, a high-yield credit rating, approximately 6,500 employees and financial responsibility for Honeywell legacy automotive segment liabilities in an amount equal to our Bendix legacy asbestos liability.

The planned separations will not require a shareowner vote.

Each spin-off will be subject to finalization of the contours of the spun-off business, assurance that the separation will be tax-free to Honeywell shareowners for U.S. federal income tax purposes, finalization of the capital structure of the three corporations, the effectiveness of appropriate filings with the SEC, final approval of the Honeywell board, and other customary matters.

HON closed at $143.60.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

Honeywell lowers its business jet delivery forecast

Honeywell projects 8,300 business jet deliveries valued at $249B through 2027

Honeywell lowers its business jet production. See Stockwinners.com for details

The business jet aviation industry is likely facing a modest pace for near-term orders due to an uncertain economic and political environment along with a very competitive used aircraft market, per the 26th annual Global Business Aviation Outlook released by Honeywell (HON).

The Global Business Aviation Outlook forecasts up to 8,300 new business jet deliveries worth $249 billion from 2017 to 2027, down 2-3 percentage points from the 2016 10-year forecast.

Key global findings in the 2017 Honeywell outlook include: Deliveries of approximately 620-640 new jets in 2017, a decline of roughly 30 aircraft year over year.

This pullback comes on the heels of a moderate decrease in 2016 and is largely due to slower order rates for mature airplane models and a transition to new models slated for late 2017 and 2018.

Operators plan to make new jet purchases equivalent to about 19 percent of their fleets over the next five years as replacements or additions to their current fleet, a decrease of 8 percentage points compared with the 2016 survey results.

Of the total purchase plans for new business jets, 19 percent are intended to occur by the end of 2018, while 17 percent and 14 percent are scheduled for 2019 and 2020, respectively.

Operators continue to focus on larger-cabin aircraft classes, ranging from the super mid-size through ultralong range, which are expected to account for more than 85 percent of all expenditures on new business jets in the next five years.

The longer-range forecast through 2027 projects a 3-4 percent average annual growth rate despite the lower short-term outlook as new models and projected improved economic performance will contribute to industry growth.

Declines in five-year operator purchase plans are offset in the long-term forecast by new programs entering service, improved economic performance and higher commodity prices, resulting in only a small decline in the overall outlook.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

Barron’s is bullish on GM, China Mobile

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

Activision to continue earnings growth from in-game spending – Activision Blizzard (ATVI) started encouraging more in-game spending, getting users to pay for new weapons, new missions, and new virtual outfits within titles they owned and as a result its stock soared since the beginning of the year, Emily Bary writes in this week’s edition of Barron’s. Smaller competitors have also ramped up recurring spending, with shares of Electronic Arts (EA) and Take-Two Interactive Software (TTWO) also jumping in 2017, she notes. Bary adds game makers should continue to see strong earnings growth from in-game spending.

China Mobile looks cheap, but there may be a catch – China Mobile (CHL) has $60B of net cash, equal to 30% of its market shares, Andrew Bary writes in this week’s edition of Barron’s. But many fear the Chinese government, which owns 73% of the company, will divert it to prop up other enterprises, he notes, adding that as a result the company’s shares have performed poorly in the last few years.

Cognizant is returning cash to investors – Cognizant (CTSH) is building a lucrative digital-consulting business, Resham Kapadia writes in this week’s edition of Barron’s. Meanwhile, the company’s shareholders could see a twofold payoff thanks to activist investor Elliott Management, which took a 4% stake last November, acquired three board seats, and pressed management to prioritize profit-margin expansion, the publication noted, adding that Cognizant will return $3.4B through 2018 via stock buybacks and dividends.

GM (GM) well-placed to make self-driving, battery-powered cars – In a follow-up story, Barron’s says General Motors has become an autonomously driven stock, climbing to $45 on chatter over GM being well-placed to make the self-driving, shared, battery-powered cars of the future. GM remains more than 60% cheaper than the S&P 500, the publication noted, adding that investors should hold out for more upside, and the 3.4% dividend yield.

BP, Royal Dutch Shell dividends look safe – Foreign companies tend to favor paying dividends over buying back stock, Lawrence Strauss writes in this week’s edition of Barron’s. BP (BP), Enel, ING Group (ING), Royal Dutch Shell (RDS.A), TSMC (TSM) and WPP (WPPGY) dividends all look safe, Strauss notes, adding that with the exception of Royal Dutch Shell and BP, they are all expected to pay higher dividends in 2018 than in 2017.

Nvidia stock/options market disconnection an opportunity – While Nvidia (NVDA) is “red hot” in the stock market, it is “lukewarm” in the option market, which creates an “intriguing” opportunity, Steven Sears writes in this week’s edition of Barron’s.

E-Commerce helping Wal-Mart ‘jump-start stalled revenue – While Wal-Mart (WMT) has played in online shopping since 2000, it got a boost a year ago with its $3.3B acquisition of Jet.com, Jack Hough writes in this week’s edition of Barron’s. As an e-Commerce player, Wal-Mart is growing faster than Amazon (AMZN) has in years, and shareholders will benefit, he adds.

BEARISH  MENTIONS

Costco shares still fell despite good quarter– Since Amazon (AMZN) announced its acquisition of Whole Foods, Costco (COST) has been “on the ropes,” Ben Levisohn writes in this week’s edition of Barron’s. The retailer shares have dropped 12% since then, even as the company delivers earnings beats and same-store sales increases, he adds.

RH shares fully priced – Combined with July-quarter report, RH‘s shares (formerly known as Restoration Hardware) buyback has lifted its stock 146% this year and “squeezed those unwelcome guests called short sellers,” Bill Alpert writes in this week’s edition of Barron’s. But now RH shares look fully priced, and is one of the most richly priced retailers around, he adds.

Gun shares look overvalued – Tragedies involving guns and political pronouncement about gun violence tend to move shares of publicly traded firearms companies, such as Sturm Ruger (RGR), American Outdoor Brands (AOBC) and Vista Outdoor (VSTO), Vito Racanelli writes in this week’s edition of Barron’s. But with prospects dim for stricter gun control, an impetus for long-term sales growth is lacking, he notes, adding that the stocks look overvalued.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

Barron’s is bullish on Applied Materials and Expedia

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

Applied Materials, TSMC among ‘heroes’ of AI – Shares of Applied Materials (AMAT), the largest vendor of tools to Intel (INTC) and others, and TSMC (TSM), the largest contract manufacturer of circuits, which serves chip vendors such as Nvidia (NVDA) seem a good bet for the foreseeable future as computer-chip technology enters a bold new phase, Tiernan Ray writes in this week’s edition of Barron’s.

General Dynamics most promising amid corporate aircraft comeback – The business-jet market is showing signs of a comeback and the plane maker that offers the most promise to investors appears to be General Dynamics (GD), whose Gulfstream models are among the most popular corporate jets, Lawrence Strauss writes in this week’s edition of Barron’s.

First Solar to benefit from potential aggressive tariff hike – Cheap imported solar cells have fueled an alternative-energy boom in the U.S., but now President Donald Trump is considering tariffs that could slow the flow of foreign cells, Avi Salzman and Bill Alpert write in this week’s edition of Barron’s. If the White House pushes ahead with an aggressive tariff hike, the major beneficiary would be First Solar (FSLR), the U.S. industry leader, whose products would become cheaper than those sold by foreign competitors, while residential solar firms such as Sunrun (RUN) would be hurt, as they would no longer have access to cheap cells, they added.

Expedia still has room to rise – In a follow-up story, Barron’s says that Expedia’s HomeAway is starting to look like a “home run” as it is contributing a hefty portion of overall growth. That bodes well for Expedia (EXPE) stock, the publication notes, adding that a double-digit return seems likely over the next year.

Senate Health funding helps Thermo Fisher – In a follow-up story, Barron’s says that by blocking President Trump’s proposed research funding cuts, the Senate helps Thermo Fisher’s (TMO) key market.

Target lifts pay as retailers bid for workers in tight market – In a follow-up story, Barron’s notes that with the jobless rate at a 16-year low, it could be challenging for retailers to find sufficient holiday sales help this year. As retailers bid for workers in a tight labor market, Target (TGT) followed Wal-Mart (WMT) in lifting hourly pay, the publication noted.

BEARISH MENTIONS

Competition may be coming after Tesla – While electric vehicles currently sell for about $8,000 more than gas guzzlers, they will be cheaper than traditional cars by the early to mid-2020s, Emily Bary writes in this week’s edition of Barron’s, citing Cowen analyst Jeffrey Osborne. The increasing affordability of electric vehicles may not be good news for Tesla (TSLA), as rivals may see it as an incentive to take the space seriously, Bary adds


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

Exa Corporation sold for $400 million

Exa Corp. to be acquired by Dassault Systemes for $24.25 per share 

Exa Corporation sold for $400 million. See Stockwinners.com for details

Exa Corporation (EXA) announced that its board has unanimously agreed to be acquired by Dassault Systemes in a transaction valued at approximately $400M or $24.25 per share.

Under the terms of the merger agreement, a subsidiary of Dassault Systemes will commence a tender offer within the next 10 business days to acquire all of the issued and outstanding shares of Exa common stock for a price of $24.25 per share payable in cash upon completion of the offer.

This represents a fully diluted equity value for Exa of approximately $400M. The acquisition is expected to close in Q4.

With the addition of Exa, Dassault Systèmes’ 3DEXPERIENCE platform will provide customers with a proven portfolio of Lattice Boltzmann fluid simulation technologies, fully industrialized solutions and over 350 highly experienced simulation professionals.

Simulation of fluid flow, such as the cooling of an engine or the lift of a wing, is a necessary component of simulating the physical behavior of products, nature and life. For the many situations where fluid flow conditions change rapidly, simulation of dynamically variable flows is critical to accurate assessments of a product and its behavior in its environment. For these applications, the combination of Exa’s accuracy and timeliness provides results that are superior to those of alternative CFD methods.

Completion of the transaction is subject to customary closing conditions, including required regulatory approvals. The acquisition is expected to close in the fourth quarter of 2017, subject to the satisfaction of customary closing conditions.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

Barron’s is bullish on Oracle, bearish on Six Flags

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

Gene therapy may be nearing ‘major breakthrough.’  – Gene therapy is rapidly emerging as one of the most exciting areas in biotechnology, and generating new hope for patients with rare and often deadly inherited diseases, Andre Bary writes in this week’s edition of Barron’s. The first regulatory approval for replacement gene therapy could come as soon as January, if the FDA gives the go-ahead to Spark Therapeutics (ONCE) for its one-time treatment that targets a rare, inherited retinal condition leading to blindness, he adds. Other publicly traded companies developing treatments in this area include AveXis’ (AVXS), Regenxbio (RGNX), Audentes Therapeutics (BOLD), and Voyager Therapeutics (VYGR).

Key events may create ‘short squeeze’ in GoPro stock.  GoPro (GPRO), a heavily shorted stock, could be the object of “one of the most interesting trades in the options market,” Steven Sears writes in this week’s edition of Barron’s. Options on the shares are relatively inexpensive ahead of key events that may create a short squeeze in the stock, he argues, adding that a recommended upside call trade that expires in January could produce “extraordinary profits” if that happens.

Oracle shares could return 20% in a year. – Oracle (ORCL) is a latecomer to the cloud, but the company’s revenue from that business has been growing quickly from a small base, and shares have responded, Jack Hough writes in this week’s edition of Barron’s. At a recent $48, shares look like “a good deal,” he argues, adding that they could return 20% in a year.

Xilinx, Synopsys are ‘rising stars’ amid natural evolution of AI. – As everyday items get “smart,” the technology around artificial intelligence gets more real, Tiernan Ray writes in this week’s edition of Barron’s, adding that the “rising stars” in this natural evolution of AI include Xilinx (XLNX), Synopsys (SNPS), and Cadence Design (CDNS).

BEARISH  MENTIONS

iRobot suffering after onslaught of SharkNinja cheaper models. – In a follow up story, Barron’s notes that as it warned in July, iRobot’s (IRBT) Roomba robot vacuum now has a “formidable” new rival, with the recent introduction of cheaper products from SharkNinja. While IRobot has maintained a commanding share of the product category it pioneered, aggressive marketing, broad sales distribution, and value-priced products have quickly won SharkNinja a hunk of the market for conventional vacuum cleaners, the publication adds.

Six Flags may have peaked– Investors have had an incredible ride with theme-park operator Six Flags (SIX), with shares climbing sixfold since it exited bankruptcy in 2010, Bill Alpert writes in this week’s edition of Barron’s. However, “every ride ends,” and with the number of individuals coming to the parks flat for years, upside looks limited.

Major aircraft makers, suppliers face off – While United Technologies (UTX) proposed $30B acquisition of Rockwell Collins (COL) is not a done deal, its aggressive expansion strategy illustrates trends unfolding in the industry, namely a shift in traditional turf boundaries, Lawrence Strauss writes in this week’s edition of Barron’s. This is just the latest in a spate of recent M&A deals that illustrate a battle between major commercial aircraft manufacturers, namely Boeing (BA) and Airbus (EADSY), and some of their suppliers, he argues, pointing out that there is “lots of maneuvering” to see who will dominate the lucrative business of being an aerospace hardware and service provider.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

Barron’s is bullish on Cullen/Frost and Caterpillar

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

Affiliated Managers bull case ‘working out well,’ – In a follow up story, Barron’s says that Affiliated Managers (AMG) stock has jumped about 25% over the past 12 months but the opportunity is not over.

Betting on Cullen/Frost (CFR) stock could produce a 25% gain – Frost Bank has survived the Great Depression, the oil-patch bust of the 1980s, and the housing bubble of the 2000s, but investors seem to be betting it will have a tough time handling Texas latest challenges, namely weak energy prices and the effects of Hurricane Harvey, Lawrence Strauss writes in this week’s edition of Barron’s. However, he believes anyone making that wager is likely to lose in the long run, with the shares of its parent Cullen/Frost Bankers looking like a bargain for patient investors who could have a 25% gain.

Caterpillar, Analog Device among few stocks rising on earnings surprises – Until recently, companies that beat quarterly earnings estimates could routinely expect shares to rise, but not anymore, Jack Hough writes in this week’s edition of Barron’s. Although there is a shortage of true upside surprises, Hough says there are still some, with Align Technology (ALGN), Analog Services (ADI), Caterpillar (CAT), E-Trade Financial (ETFC) and Red Hat (RHT) among those who beat earnings and revenue estimates and enjoyed quick share price gains as a result, which should bode well for future performance.

 

BEARISH  MENTIONS

Equifax breach unsettles online investors – Equifax (EFX) breach unsettles online investors, with brokers stressing the need for getting rid of Social Security IDs and for close monitoring of accounts for unusual activity, Theresa Carey writes in this week’s edition of Barron’s.

Almost no one expecting FedEx results to be good– FedEx  (FDX) is set to report first-quarter earnings on Tuesday, and almost no one is expecting them to be good, Ben Levisohn writes in this week’s edition of Barron’s. Levisohn argues, however, that just because FedEx is “an express shipper doesn’t mean we need to rush to judgment,” and says sitting back and waiting to see how TNT plays out looks like the best strategy.

Goldman Sachs might be underdog – Goldman Sachs (GS) is rarely thought of as an underdog, but it might be right now, Ben Levisohn writes in this week’s edition of Barron’s. Goldman’s decline is a result of its own missteps, Levisohn notes, adding that if it can correct its problems, its stock may be able to close the performance gap with its peers.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

Barron’s is Bullish on Carlyle Group, Bearish on Nike

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

Altaba could reward investors ‘nicely’  – Alibaba (BABA) is having a stellar year and a cheap way to play it is through Altaba (AABA), whose 15% stake in Alibaba is valued at $65B, Andrew Bary writes in this week’s edition of Barron’s. While Altaba shares are up 65% this year on Alibaba’s big gains, it trades at a 30% discount to the value of the company’s assets, the publication adds’

New Apple Watch may threaten telecoms – As the world awaits the 10th-anniversary iPhone, the real news may be buried within a redesigned Apple Watch 3, Tiernan Ray writes in this week’s edition of Barron’s. Apple (AAPL) has said that the next smartwatch will gain the ability to dial up the internet wirelessly even when not connected to an iPhone, the publication notes, adding that the new Apple Watch will probably make use of an embedded SIM. Apple already allows people using its iPad tablet to select which wireless carrier they want on a month-by-month basis, and Apple Watch will allow the same, signaling that Apple may want to take more control of the mobile subscriber, Tiernan says.

Carlyle Group may be ‘best deal’ in private equity – Carlyle Group (CG) is one of the world’s largest private-equity managers, with $170B in assets under management spread over six continents, but has had a much lower profile with investors, with its units fallen 24% over the past five years, Jack Willoughby writes in this week’s edition of Barron’s. Carlyle has finally put its hedge fund woes behind it and expects a big jump in earnings, Willoughby notes, while questioning if the stock price can double.

Texas Instruments, CVS Health worth a look for income investors.  Barron’s has looked for firms with the highest dividend-safety rankings that yield at least 2% and have market caps above $25B. The top five finishers based on those criteria were Texas Instruments (TXN), CVS Health (CVS), PNC Financial (PNC), Sysco (SYY) and Medtronic (MDT), Lawrence Strauss writes in this week’s edition of Barron’s.

BEARISH  MENTIONS

Nike could fall another 10% – As Adidas (ADDYY) picks up the pace, Nike (NKE) is losing ground in the sneaker race, and its stumbling stock could fall another 10% or more in the coming year, Jack Hough writes in this week’s edition of Barron’s. Hough argues that Nike’s problem is twofold, namely the growth of e-commerce which has rattled Nike’s retail partners, including Foot Locker (FL), and Adidas that seems to have finally figured out how to sell sneakers in the U.S.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners.

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

 

Rockwell Collins Sold for $30 billion

United Technologies Corp. to buy Rockwell Collins for $140 a share

Rockwell Collins Could Be Sold for $145 a share. See Stockwinners.com Market Radar

The Dow Jones Industrial Average component, United Technologies Corp. (UTX) to buy Rockwell Collins Inc.  (COL) for about $23 billion, to create an aerospace behemoth that can outfit warplanes and jetliners from tip to tail.

The transaction creates an aircraft-parts giant better positioned to withstand the squeeze from planemakers Boeing Co. and Airbus SE for pricing discounts and higher output.

Under the terms of the agreement, each Rockwell Collins share owner will receive $93.33 per share in cash and $46.67 in shares of United Technologies common stock, subject to a 7.5% collar centered on United Technologies’ August 22, 2017 closing share price of $115.69.

United Technologies expects to fund the cash portion of the transaction consideration through debt issuances and cash on hand, and the company is committed to taking actions to maintain strong investment grade credit ratings.

The transaction is projected to close by Q3 of 2018, subject to approval by Rockwell Collins’ share owners, as well as other customary closing conditions, including the receipt of required regulatory approvals. The purchase price implies a total equity value of $23B and a total transaction value of $30B, including Rockwell Collins’ net debt.

The combined company will boast a broad suite of products for commercial aircraft, from Rockwell Collins’s touchscreen cockpit displays to jet engines made by the Pratt & Whitney division of United Technologies.

United Technologies said it will combine its aerospace business with Rockwell Collins in a new unit named Collins Aerospace Systems. Rockwell Collins Chief Executive Officer Kelly Ortberg will head the division, while Dave Gitlin, who currently runs UTC Aerospace Systems, will serve as president and chief operating officer.

United Technologies is increasing its bet on aerospace, where it has stumbled recently with the rocky rollout of a new jet engine that cost $10 billion to develop. The market accounts for about half of sales at the company, with the rest coming from elevators, air conditioners and other building systems.

Rockwell Collins is already absorbing the largest acquisition in its history. The company earlier this year closed the acquisition of B/E Aerospace, adding deluxe jetliner seats, lavatories and galley equipment to a lineup of high-technology avionics products.

COL closed at $130.61.

Related Blogs


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners.  

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.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners.

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

Barron’s is Bullish on Starbucks, Bearish on Motorola Solutions

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

Advance Auto Parts hit wall on Q2 results, but turnaround intact – In a follow up story, Barron’s says Advance Auto Parts (AAP) ran into a brick wall when it reported Q2 adjusted EPS of $1.58, below analyst expectations of $1.66, with revenue flat at $2.26B. Nonetheless, Advance Auto remains an “attractive self-help story,” with the turnaround expected to become clearer in Q4 and beyond, the publication noted

Gardner Denver integrated strategy beginning to pay off – Under KKR (KKR), who bought the company for $3.9B in 2013, Gardner Denver (GDI) has retooled its compressor and pump business, Jack Willoughby writes in this week’s edition of Barron’s. Based on Gardner Denver’s first quarterly report as a born-again public company, the integrated strategy is beginning to pay off, the publication noted, saying that upside is 40%.

Lockheed Martin should benefit from boost in military outlays – Large-cap defense stocks have had 20%-plus total returns over the past year, and more gains could be ahead for shares of the No. 1 U.S. defense contractor, Lockheed Martin (LMT), Lawrence Strauss writes in this week’s edition of Barron’s. An expected boost in U.S. military spending amid global tensions is driving the defense sector, the publication noted, adding that President Trump’s initial budget proposal for fiscal 2018 calls for a 9% increase.

Retail stocks swings could provide opportunity – This earnings season, retail companies are “either hitting a home run or striking out,” with misses from Foot Locker (FL),  and L Brands (LB), while Urban Outfitters (URBN) and Ross Stores (ROST) were massive winners, Ben Levisohn writes in this week’s edition of Barron’s. While this could be a new normal for retail stocks, the market’s sudden swings could provide opportunity, the publication noted.

Starbucks could jump 20% – There were plenty of reasons for skepticism when Starbucks (SBUX) rolled out its digital ordering system nationally in September 2015, but the company’s mobile order-and-pay feature has become a major hit, Alex Eule writes in this week’s edition of Barron’s. In the last quarter, 9% of Starbucks’ U.S. orders were placed in advance, and nearly a third of all its orders were paid for via the company’s phone app, the publication noted. Eule believes that the stock could jump 20% or more over the next 12 months

BEARISH MENTIONS

Public-safety broadband network may supplant Motorola systems – FirstNet has tapped AT&T (T) to build a public-safety network that could link every police, fire, and emergency medical officer in the U.S., Bill Alpert writes in this week’s edition of Barron’s. Alpert says it is a “nice opportunity” not only for AT&T, but also for cellular infrastructure providers like Crown Castle International (CCI), SBA Communications (SBAC), American Tower REIT (AMT), and CommScope Holding (COMM). However, it could produce “terrible static” for Motorola Solutions (MSI), the supplier of most traditional two-way radios, the publication noted, adding that eventually FirstNet may supplant the old systems.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to StockwinnersStockwinners offers stock picks, option picks, daily stock upgrades, stock downgrades, and earnings reports that are delivered to your email.

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

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.


STOCKWINNERS

To read timely stories similar to this, along with money making trade ideas, sign up for a membership to StockwinnersStockwinners offers stock picks, option picks, daily stock upgrades, stock downgrades, and earnings reports that are delivered to your email.

This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.