ExxonMobil to increase its Permian Basin output

Exxon Mobil to increase Permian output to 1M barrels per day by 2024

ExxonMobil to increase its Permian Basin output, Stockwinners

ExxonMobil (XOM) said it has revised its Permian Basin growth plans to produce more than 1 million oil-equivalent barrels per day by as early as 2024 – an increase of nearly 80 percent and a significant acceleration of value.

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ExxonMobil expects to make 10% return on its Permian Basin fields at $35 per barrel oil, Stockwinners

The size of the company’s resource base in the Permian is approximately 10 billion oil-equivalent barrels and is likely to grow further as analysis and development activities continue.

ExxonMobil’s investments in the Permian Basin are expected to produce double-digit returns, even at low oil prices.

At a $35 per barrel oil price, for example, Permian production will have an average return of more than 10 percent.

The anticipated increase in production will be supported by further evaluation of ExxonMobil’s Delaware Basin’s increased resource size, infrastructure development plans, and secured capacity to transport oil and gas to ExxonMobil’s Gulf Coast refineries and petrochemical operations through the Wink-to-Webster, Permian Highway and Double E pipelines.

Among the company’s key advantages in the Permian, is its acreage position.

The company has large, contiguous acreage that enables multi-well pads in large development corridors connecting to efficient gathering systems, reducing development costs and accelerating production growth.

ExxonMobil’s scale, financial capacity and technical capabilities enable the company to maximize the value of the resource. ExxonMobil is actively building infrastructure to support volume growth.

Plans include construction at 30 sites to enhance oil and gas processing, water handling and ensure takeaway capacity from the basin. Construction activities include central delivery facilities designed to handle up to 600,000 barrels of oil and 1 billion cubic feet of gas per day and enhanced water-handling capacity through 350 miles of already-constructed pipeline.

The investment plans will also bring great benefits to the local area. ExxonMobil’s expansion in the region will benefit communities in West Texas and southeast New Mexico through billions in property tax revenue, economic development and the creation of high-paying jobs.

ExxonMobil remains one of the most active operators in the Permian Basin and has 48 drilling rigs currently in operation and plans to increase its rig count to approximately 55 by the end of the year.

Increased use of technology, including enhanced subsurface characterization, subsurface modeling and advanced data analytics to support optimization and automation, will help the company reduce costs, improve its development plan and increase resource recovery.

Crude oil is up 5 cents to $56.64 per barrel. XOM last traded at $80.22.

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International rig counts rise

Baker Hughes reports January international rig count up by 6 to 960 rigs

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Rig Counts Rise

Baker Hughes (BHGE) reported international rig count for January 2018 was 960, up 6 from the 954 counted in December 2017, and up 27 from the 933 counted in January 2017.

The international offshore rig count for January 2018 was 196, up 5 from the 191 counted in December 2017, and down 10 from the 206 counted in January 2017.

The average US rig count for January 2018 was 937, up 7 from the 930 counted in December 2017, and up 254 from the 683 counted in January 2017.

The average Canadian rig count for January 2018 was 278, up 73 from the 205 counted in December 2017, and down 24 from the 302 counted in January 2017.

The worldwide rig count for January 2018 was 2,175, up 86 from the 2,089 counted in December 2017, and up 257 from the 1,918 counted in January 2017.

WTI crude is down 33 cents to $63.06 pr barrel.


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Midstates Petroleum proposes merger with SandRidge Energy

Midstates Petroleum proposes all-stock combination with SandRidge Energy

Midstates Petroleum calls for merger with SandRidge Energy. Stockwinners.com
Midstates Petroleum calls for merger with SandRidge Energy

Midstates Petroleum Company (MPO) announced that it has proposed to combine with SandRidge Energy (SD) in an all-stock merger that would create the leading exploration and production company in the Mississippian Lime play.

Earlier today, Midstates sent a letter to the Board of Directors of SandRidge detailing the merger proposal and its strong desire to negotiate a friendly transaction.

Given the highly complementary nature of the businesses, significant shareholder overlap, and the substantial operational synergies, Midstates believes that the proposed combination is attractive strategically and financially for the shareholders of both companies.

Under the terms of the proposal, SandRidge shareholders would own approximately 60% of the combined company and Midstates shareholders would own 40%.

David J. Sambrooks, Midstates President and Chief Executive Officer, stated, “We are ready to move forward immediately to negotiate a merger agreement to form a stronger, more formidable company.

The combined company will have zero net debt, strong liquidity, and forecasted free cash flow generation of up to $480 million over the next five years.”

Sambrooks continued, “Combining these two businesses in an at-market merger would bring undeniable benefits to shareholders of both companies.

The strategic fit and geographic overlap of both companies’ assets in the Miss Lime and NW STACK builds critical mass, creates significant synergies, and generates superior, risk-adjusted returns.”

Midstates is making this proposal public to inform both Midstates and SandRidge shareholders of the compelling value creation potential of the combination and to encourage SandRidge’s board to move towards a negotiated transaction.

MPO closed at $15.45. SD closed at $16.50.


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Barron’s is bullish on Danaher and GM

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

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Stockwinners offers Barron’s review of stocks to buy, stocks to watch

BULLISH   MENTIONS:

Danaher among more reliable stocks– Danaher’s (DHR) results were met with cries of sell even though they were stellar as ever, sending the shares into negative territory on Monday, Ben Levisohn writes in this week’s edition of Barron’s. Fast-forward to Friday, the stock market was in freefall but the stock weathered the blast, he notes, adding that there is something to be said for Danaher’s consistency. While it will never be the fastest grower, it has grown sales at 4%-5%, quarter after quarter, while cutting costs and improving efficiency to grow earnings, making it one of the more reliable stocks out there, the report says.

General Motors shares could rise more than 35% – General Motors (GM) has been turning in strong profits, which have helped it fund research into autonomous and electric cars, Jack Hough writes in this week’s edition of Barron’s. When Tesla’s (TSLA) stock-market value surpassed General Motors last year, it was big news, but recently the latter has edged back into the top spot, he adds. Selling at just seven times forward earnings, General Motors shares have room to rise more than 35% in the year ahead, Hough contends.

Cisco, Oracle among stocks with rising dividend estimates – Some of the large-cap companies whose dividend estimates for their current fiscal year have increased by at least 2% since July include Cisco (CSCO), Texas Instruments (TXN), UnitedHealth (UNH), Oracle (ORCL), Comcast (CMCSA), 3M (MMM), AbbVie (ABBV), Boeing (BA), Union Pacific (UNP), Bank of America (BAC), Citigroup (C), Wells Fargo (WFC) and JPMorgan (JPM), Lawrence Strauss writes in this week’s edition of Barron’s.

TD Ameritrade adding round-the-clock trading – TD Ameritrade  (AMTD) is offering customers more social media capabilities and has added round-the-clock trading in 12 exchange-traded funds, from Sunday evening through Friday evening using its thinkorswim trading platform or TD Ameritrade Mobile Trader app, Theresa Carey writes in this week’s edition of Barron’s.

Apple, Facebook facing challenges, shares still holding up well – Considering the challenges they face, both Apple (AAPL) and Facebook (FB) shares held up well, Tiernan Ray writes in this week’s edition of Barron’s. Apple offered a forecast for its March quarter that missed expectations, and Wall Street now thinks that the company is reaching a bit too far in pricing the iPhone X at $999-$1150, he notes. Nonetheless, Apple is still an empire very much in control of its destiny, Ray contends. Meanwhile, Facebook said people are spending less time than before on the site, but Mark Zuckerberg calmly assured the Street that he thinks it is a good thing, the report points out.

Cisco, Salesforce among most sustainable companies – Cisco (CSCO) tops Barron’s first annual list of most sustainable companies, followed by Salesforce (CRM), Best Buy (BBY), Intuit (INTU), HP Inc. (HPQ), Texas Instruments (TXN), Microsoft (MSFT), Oshkosh (OSK), Clorox (CLX) and Xylem (XYL).

Spirit Air offers plenty of potential upside – Following a steep decline, shares of Spirit Airlines (SAVE) now trade for less than 12 times forward earnings estimates, a good value or growth play, Brett Arends writes in this week’s edition of Barron’s. Long-term investors may need to be patient because short-term headwinds pop up so frequently for airline stocks, but in return for its risks, Spirit offers reasonable valuations and plenty of potential upside, he argues

BEARISH  MENTIONS:

Musk new compensation package sets wrong targets – Tesla’s  (TSLA) new 10-year compensation package, which considers that Elon Musk could grow the company’s market capitalization from the current $58B to $650B in 2028, is not shareholder-friendly as it emphasizes market cap goals, not sustainable profits, Vito Racanelli writes in this week’s edition of Barron’s.


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United to increase capacity by 5 percent

United’s plan to increase capacity drags down airline stocks 

United plan to increase capacity by 5%. Stockwinners.com
United plan to increase capacity by 5%.

Shares of United Continental (UAL) are sliding after the company said in its earnings conference call that it plans to grow capacity by 4%-6% in 2018, likely threatening its profit margin.

This comes as United looks for a competitive edge in its fight against low-cost carriers such as Southwest Airlines (LUV) and JetBlue (JBLU).

This morning, Evercore ISI analyst Duane Pfennigwerth downgraded United to a neutral-equivalent rating.

RESULTS, OUTLOOK

Last night, United Continental reported fourth quarter adjusted earnings per share of $1.40 and revenue of $9.4B, with consensus at $1.34 and $9.42B, respectively.

The company also said Q4 2017 consolidated passenger revenue per available seat mile was up 0.2% compared to Q4 2016.

Additionally, the carrier noted it sees 2018 capacity growth of 4%-6%, and a similar growth rate in 2019 and 2020.

United expects 2018 EPS to be $6.50-$8.50 and sees 2018 capital expenditures of $3.6B-$3.8B.

CAPACITY CONCERNS

In a research note to investors this morning, Evercore ISI’s #Pfennigwerth downgraded United Continental to In Line from Outperform, with a $75 price target, following its quarterly report.

The analyst noted that while United’s belief appears as high as ever in the view that restoring domestic share in its hubs is the shortest path to margin expansion, the “biggest missing ingredient” from its presentation was any evidence that the strategy is working.

The company’s higher growth pitch likely plays well with labor ahead of another round of contract negotiations in 2019 but limits broader participation from longer term investors seeking confidence at this point in the cycle, he contended.

Furthermore, the analyst argued that growth acceleration following poor pricing execution in 2017 and in the face of a significantly higher fuel curve is “surprising.”

Meanwhile, his peer at Stephens also voiced concern over the company’s capacity growth plans. While analyst Jack #Atkins acknowledged that he was encouraged that United issued both 2018 and long-term EPS guidance, he believes its plan to grow its system capacity by 4%-6% for each of the next three years is “concerning” as it implies about 6%-8% growth in the domestic market.

This level of capacity growth risks muting unit revenue growth in the market as well as potentially sparking a competitive response from one of United’s network peers, Atkins added.

The analyst told investors he expects the group to come under pressure as investors work to determine who has the most exposure to its incremental capacity growth and what it means for domestic revenue trends for the industry. He reiterated and Equal Weight rating and $78 price target on United Continental shares.

REMAINS TOP PICK

In a note of his own, UBS analyst Darryl #Genovesi told investors he expects estimates for United Continental to move higher over the next few days and that he came away from the company’s guidance meeting more positive on the fundamental go-forward strategy.

The analyst pointed out that he believes the capacity concerns will likely get swept under the rug if industry RASM continues to be strong. Genovesi reiterated a Buy rating and $90 price target on United shares.

PRICE ACTION

UAL is down 10.5% to $69.80.


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Barron’s is bullish on Salesforce.com

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

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Stockwinners offers Barron’s review of stocks to buy, stocks to watch

BULLISH  MENTIONS

Johnson & Johnson (JNJ) could rise further – In a follow-up story, Barron’s notes that Johnson & Johnson’s shares had a blockbuster year, as concerns about its big rheumatoid-arthritis drug Remicade proved too pessimistic, but shares could rise almost 20% as investors view the company’s drug pipeline in a new light.

Companies trading mostly in U.S. to benefit from tax reform – Investors in companies that trade mostly in the U.S. such as Southwest Airlines (LUV) should benefit greatly from what is arguably the signature provision of the tax reform bill, namely a drop in the federal corporate tax rate, John Kimelman writes in this week’s edition of Barron’s. Tech giants such as Apple (AAPL), Microsoft (MSFT) and Alphabet (GOOG; GOOGL) should experience a huge windfall from the legislation’s provision that could set the rate on the taxes of foreign earnings held in cash as low as 10%, thus encouraging repatriation, he says.

Transfer Partners situation to be resolved by 2019/2020 – Master limited partnerships have been dogged for the past several years by investor concerns, with Energy Transfer Partners (ETP) being one of the worst-performing large MLPs, Andrew Bary writes in this week’s edition of Barron’s. Its unit price has tumbled since the merger with Sunoco Logistics, even as the units of its sister company, Energy Transfer Equity (ETE) have held steady, he adds. The endgame probably will be a merger of the two companies, or an equity buyout of the IDRs by Energy Transfer Partners, Barron’s contends.

Start-ups dwelling in tech giants shadow – Tech giants such as Amazon (AMZN), Alphabet (GOOG; GOOGL) and Apple (AAPL) show no signs of slowing down, increasingly calling the shots in tech in a way that limits the scope within which small companies operate, Tiernan Ray writes in this week’s edition of Barron’s. While many start-ups show promise but “dwell in the shadow of the giants,” he adds. Commenting on recent IPOs, Barron’s notes that while Appian (APPN) and Roku (ROKU) have surged 39% and $85% respectively, cloud-computing darlings Mulesoft (MULE) and Tintri (TNTR) are down since their debuts.

Wall Street about to join in Bitcoin fun – Bitcoin shot past $11,000 last week but slid sharply right after before surging yet again, Avi Salzman writes in this week’s edition of Barron’s. Now Wall Street is about to join in the fun, he notes, adding that getting listed on some of the largest exchanges in the country is a “tectonic shift for Bitcoin.” Banks like Goldman Sachs (GS) are considering helping clients execute Bitcoin trades, and once “they dip their toes in,” there may be no turning back, Salzman contends.

 Salesforce.com has 25% upside – As Salesforce (CRM) launches new products, its “addressable market” expands, which means more opportunities for sales and potentially wider margins, Jack Hough writes in this week’s edition of Barron’s. The company’s shares should continue to outperform as revenue rises and margins improve, and a 25% increase in 2018 to $130 seems achievable, he adds.


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Rig counts continue to rise

Baker Hughes reports U.S. rig count up 6 to 929 rigs 

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Rig Counts Rise – See Stockwinners.com Market Radar to read more

Baker Hughes reports that the U.S. rig count is up 6 rigs from last week to 929, with oil rigs up 2 to 749, gas rigs up 4 to 180, and miscellaneous rigs unchanged.

The U.S. Rig Count is up 332 rigs from last year’s count of 597, with oil rigs up 272, gas rigs up 61, and miscellaneous rigs down 1 to 0.

The U.S. Offshore Rig Count is down 2 rigs from last week to 20 and down 2 rigs year-over-year.

The Canada Rig Count is up 7 rigs from last week to 222, with oil rigs up 4 to 111 and gas rigs up 3 to 111, and miscellaneous rigs unchanged.

The Canada Rig Count is up 22 rigs from last year’s count of 200, with oil rigs up 11, gas rigs up 13, and miscellaneous rigs down 2 to 0.

Crude oil is up 85 cents to $58.25 per barrel.  Brent crude is up $1.01 to $63.64 per barrel.


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Boeing paints a rosy picture

Boeing forecasts $730B market for new airplanes in Middle East

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Boeing (BA) forecasts that airlines in the Middle East will need 3,350 new airplanes over the next 20 years, valued at an estimated $730B.

Boeing presented its 2017 Current Market Outlook for the region during the Dubai Airshow.

“Traffic growth in the Middle East is expected to grow at 5.6% annually during the next 20 years,” said Randy Tinseth, vice president of Marketing, Boeing Commercial Airplanes.

“The fact that 85% of the world’s population lives within an eight-hour flight of the Persian Gulf, coupled with robust business models and investment in infrastructure, allows carriers in the Middle East to channel traffic through their hubs and offer one-stop service between many cities.”

More than half of the total deliveries in the Middle East will be single-aisle airplanes such as the 737 MAX.

Operators in the region will need 1,770 single-aisle airplanes valued at $190B, driven by the growth of low-cost carriers.

Boeing’s presence and support for the Middle East also includes Global Services, the company’s third and newest business unit that is expanding its service capability offerings to better support the region’s airlines and aircraft.

Around the world, Boeing has forecasted long-term demand for 41,030 new airplanes, valued at $6.1T.

These new airplanes will replace older, less efficient airplanes, benefiting airlines and passengers and stimulating growth in emerging markets and innovation in airline business models.

BA closed at $260.85.


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Barron’s is bullish on Morgan Stanley and Samsung

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

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BULLISH  MENTIONS

Caesars looks ready to grow again – After a disastrous 2008 leveraged buyout, Wall Street seems to have warmed to Caesars (CZR) story this year in a strong market for casino operators, Andrew Bary writes in this week’s edition of Barron’s. With a bankruptcy filing settled, the company’s shares have surged this year, and the gambling giant could hit $18, up 50% in the next 18 months, he adds.

Coach shares look undervalued, could rise nearly 30% – Coach (COH), which has announced that it would be changing its name to Tapestry, is finally on the right path to growth, Emily Bary writes in this week’s edition of Barron’s. Recent acquisitions and brand-loyalty initiatives should help the company maintain its market share, and in the next 12 months the shares could return nearly 30%, including dividends, she adds.

DowDuPont shares likely to return as much as 30% over next year – If DowDuPont (DWDP) can cut $3B from its yearly costs and attract a higher valuation by splitting into three parts, the shares stand to return 15%-30% over the next year, including dividends, Jack Hough writes in this week’s edition of Barron’s.

Lufthansa has more room to climb – Amid competitor’s troubles, Lufthansa (DLAKY) has scored an “upgrade to first class,” Victor Reklaitis writes in this week’s edition of Barron’s. However, several bulls say other factors will be bigger drivers, seeing the stock’s price rising to $35.36 due to a range of tailwinds, and implying a rally of about 20%, he adds.

Another 20% gain in Morgan Stanley stock likely – In a follow-up story, Barron’s says Morgan Stanley’s (MS) strategic response to the financial crisis proves more resilient than others,’ and another 20% gain in the stock is likely.

Samsung has lots of upside driven by chips/screens – Samsung (SSNLF)  stock is up 50% this year and it is still cheap, Assif Shameen writes in this week’s edition of Barron’s. While the company is known for smartphones, Samsung lives off semiconductors and screens, with analysts estimating that chips will generate 70% of profits and screens 13%, he adds.

BEARISH MENTIONS

Market pounds United, sees American/Delta as possibly safe bets – United Continental’s (UAL) earnings were bad news for the company, with shares dropping after the carrier reported better than expected earnings but offered guidance that suggested that its fourth quarter earnings would miss, Ben Levisohn writes in this week’s edition of Barron’s. While Delta Air Lines (DAL) and American Airlines (AAL) followed their peer lower, their shares did not go much lower, as the Market seems to see the two airlines as possibly safe bets, he adds.

Regulators inquiries fuel speculation about big tech breakup – Facebook (FB), Amazon (AMZN) and Alphabet (GOOG; GOOGL) deserve a lot of the credit for last week’s record stock market highs but their positive effect will now depend on how they respond to U.S. and European regulators, Tiernan Ray writes in this week’s edition of Barron’s. European inquiries and those from the U.S.’s Federal Trade Commission have prompted speculation about the breakup of these companies, he adds. And it is not only antitrust issues that are in play, as many see the huge amounts of personal data that these companies are amassing as troubling, Ray contends.


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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: 

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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.


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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:

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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


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Changes to S&P Indices

S&P announces changes to S&P MidCap 400, S&P SmallCap 600 indices

Stocks to buy, stocks to watch, upgrades, downgrades, earnings S&P Dow Jones Indices will make the following changes in the S&P MidCap 400 and S&P SmallCap 600 indices effective prior to the open of trading on Monday, October 2:

Six Flags Entertainment (SIX) will replace PAREXEL International (PRXL) in the S&P MidCap 400. Pamplona Capital Management is acquiring PAREXEL in a deal expected to be completed soon pending final conditions.

S&P SmallCap 600 constituent Sterling Bancorp (STL) will replace Oil States International (OIS) in the S&P MidCap 400, and

KEMET (KEM) will replace Astoria Financial (AF) in the S&P SmallCap 600, and

Oil States will replace Sterling Bancorp in the S&P SmallCap 600. Sterling Bancorp is acquiring Astoria in a deal expected to be completed soon pending final closing conditions. Post merger, Sterling Bancorp will be more representative of the mid-cap market space. Oil States is more representative of the small-cap market space.


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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.


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Multi-Shot Sold for $215 Million

Patterson-UTI to acquire Multi-Shot in cash and stock deal

Patterson-UTI to acquire Multi-Shot in cash and stock deal. See Stockwinners.com for details

Patterson-UTI  (PTEN) announced that it has entered into an agreement to acquire Multi-Shot, LLC d/b/a MS Energy Services, on a debt-free basis for total consideration of approximately 8.8M shares of Patterson-UTI common stock and $75M of cash.

Based in Conroe, Texas, MS Energy is a leading directional drilling services company in the United States. The pending transaction, which is expected to close early in the fourth quarter, is subject to customary closing conditions and receipt of required third party consents, and is subject to expiration or termination of the waiting period under the Hart-Scott-Rodino Act.

Under the terms of the transaction, Patterson-UTI will acquire all of the issued and outstanding limited liability company interests of MS Energy for consideration of approximately 8.8M shares of Patterson-UTI common stock and $75M of cash. In connection with this transaction, Patterson-UTI expects to acquire approximately $30M of non-cash working capital.

The transaction values MS Energy at approximately $215M, based on the most recent closing price of Patterson-UTI common stock of $15.94. Patterson-UTI will fund the $75M cash consideration using cash on hand and the Company’s revolving line of credit.

The cash consideration paid to the sellers will be used to cover transaction expenses and repay the outstanding debt at MS Energy, and as such, Patterson-UTI will not assume any debt of MS Energy.


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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.

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