Symantec (SYMC) has not been able to prove that its takeover of Veritas Software was a good deal. The company missed forecasts in the last quarter and will likley come under pricing pressure from Microsoft’s (MSFT) new anti-virus software.
Alcoa (AA) has announced a big share buyback and dividend hike. With demand for aluminum rising, the stock could as well.
The rift between the very wealthy and those with low incomes is growing. Stocks for the rich may outfperform those that have businesses that cater to the "cash strapped" Barron’s list of "Champagne Bucket" stocks: American Express (AXP), Coach (COH), General Dynamics (GD), Fortune Brands (FO), Intercontinental Hotels (IHG), Las Vegas Sands (LVS), Life Time Fitness (LTM), Merrill Lynch (MER), MGM Mirage (MGM), Saks (SKS), Sotheby’s (BID), Tiffany (TIF), Nordstrom (JWN) Textron (TXT), and Whole Foods (WFMI). Stocks companies in the lower-income part of the market: Big Lots (BIG), Dollar General (DG), Family Dollar (FDO), EZCorp (EZPW), and First Cash (FCFS).
Share of Under Armour (US), one of the hottest companies in sports gear, have risen to $51 but may not be worth more that mid-$40s. The company has a 07 P/E of 53 compared to Oakley (OO) at 23.6, Nike (NKE) at 17, Hanesbrands (HBI) at 15.3, VF (VFC) at 14.7 and Adidas (ADS) at 14.1.
Some of the large institutional investors are beginning to reconsider the Clear Channel (CCU) LBO. They feel the stock could go higher without the transaction because the company’s radio business is worth more than the offer indicates.
Morgan Stanley is saying the new developments in retirement fund tax law should get Boomers more focused on equities that provide "both healthy yield and solid earnings growth." Among S&P stocks that would include US Bancorp (USB), Pfizer (PFE), Bank of America (BAC), AT&T (T), Citigroup (C), Wachovia (WB), Altria (MO), American Electric (AEP), Dominion Resources (D), Well Fargo (WFC), Mercj (MRK), TXU (TXU), Freddie Mac (FRE), General Electric (GE), PNC Financial (PNC), Chevron (CVX), PG&E (PCG), Genuine Parts (GPC), JP Morgan Chase (JPM), VF Corp (VFC), General Mills (GIS), Coca-Cola (KO), CBS (CBS), Marsh/McLennan (MMC),and BellSouth (BLS).
Barron’s investor round table continues. Among the participants Archie MacAllaster picks Lyondell Chemical (LYO), Hartford Financial (HIG), Arch Capital (ACGL), Capital One (COF), Corning (GLW), and Pioneer Natural Resources (PXD). Abby Cohen picks General Electric (GE), Royal Caribbean (RCL), Federated Department Stores (FD), Medlmmune (MEDI), Barr Pharmaceuticals (BRL), Baker Hughes (BHI) and Symantec (SYMC). John Neff picks Lyondell Chemical (LYO), Nabor Industries (NBR), YRC Worldwide (YRCW) and Citigroup (C).
Manor Care (HCR), the nursing home chain, is working on boosting "cash flow per bed". The share price does not reflect all of the improvements in operations. One investor sees the stock moving up 30% over the next 18 months to $65.
Hansen Natural (HANS), the No.2 energy drink maker is a potential takeover target. Anhueser-Busch (BUD), which has tried to launch similar products on its own, may be a buyer.
Barron’s writes that last week’s tech earnings downgrades may have been an overreaction. Cisco (CSCO) was downgraded by several firms, but the company seems upbeat.
Douglas A. McIntyre
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