Sunday, April 25, 2010

Barron’s Summary of Whats Marinating 04/25/10


         Barron's Big Money poll – large money managers are less bullish (46% in the most recent survey vs. 59% in the fall).   Overall cautious tone to the article.  Most managers see low single digit upside in the major indices.  Respondents are neg. on debt.  Article pos. on tech (CSCO, QCOM) and more mixed on financials (pos. mention on HIG).  One manager is bullish on CMCSA.  Barron's

         FISV – positive comments; stock is cheap at low double digit multiple; earnings growth remains strong; good secular growth story; low customer attrition, recurring revs/earnings; high market share.  Stock could have upside to $70.  Co's bank customers are more healthy now and starting to spend again.  Barron's

         RMBS – stock could see binary move; successful wins against both Micron and Hynix could push the stock to $50; however, legal losses could push the stock to $15.  Barron's

         IBKR – Barron's notes that the co's margin lending rates are well below peers like SCHW and AMTD.  Margin lending is a big profit center for brokers.  Barron's

         GS - Barry Ritholtz thinks the SEC has a pretty strong case against Goldman; Ritholtz thinks there is ample evidence that Goldman materially misrepresented the CDO in question to long investors.  Barron's

         GS – positive comments in Barron's; the co's recent earnings report signals that fundamentals remain strong and that Goldman remains a trading powerhouse; valuation is very cheap.  The stock could have upside to $190.  Barron's

         PFG – cautious comments in Barron's; fundamentals are improving but valuation is rich at current levels. 

         Trading – Santoli thinks investors are too giddy in the current market.  Barron's

         Tech – bullish on Apple still as the company is "unstoppable" – don't take profits and don't short the stock.  MSFT is setting up for a major second half.  Avoid most of wireless as industry dynamics remain troubled.  

         T – positive comments in Barron's; worries w/recent earnings release are overblown.  Rising ARPU making up for lower sub adds.  Barron's

         Tech M&A – M&A activity could pick up in software according to Barron's; CSCO, EMC, MSFT, IBM, HPQ are among the potential buyers.  Investors should consider options strategies to take advantage.  Barron's

         GES – Barron's is positive on the stock, saying shares could rise another 25% as sales grow double digits this year w/high profit margins.

         LTM – Barron's The Trader is cautious on the run-up in the stock saying it's unwarranted, as 1) a large part of earnings improvement comes from cutting costs, i.e. advertising, and that stocks w/20x PEs are given them for growth not cost cutting, 2) co turned FCF positive last year due to a cut in CapEx not better operations and that co again this year plans to open only 3 stores, down from pace of 10, and 3) insiders have been selling lately.  Bears think stock deserves to trade 1/3 lower than it currently does, however it is considered a "crowded short" with 25% of the float short already.

         BJRI – Barron's the Trader is negative on the stock, citing valuation (trades at 41x) and says the stock is discounting growth that is far out in the future.


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