Here's a one page summary of this weekend's (April 8) Barron's (paid sub. req.), noting stocks to watch for Monday morning when the market opens and brief comments on the Barron's articles. Note: clicking on a stock ticker pulls up opinion, analysis and a quote for that stock.
Lead Article: Minting Money, The Goldman Sachs Way
by Michael Santoli
- Highlighted companies: Goldman Sachs Group, Inc. (GS)
Barron's Feature: A Tempting Wager
by Neil A. Martin
- Highlighted companies: Harrah's Entertainment (HET), MGM Mirage (NYSE: MGM), Las Vegas Sands Corp (LVS), Wynn Resorts Ltd. (WYNN)
Barron's Feature: Jack's Juicy Situation
by Jennifer Ablan
- Highlighted companies: Jack in the Box (JBX)
Economic Beat: More Jobs, Higher Pay
by Gene Epstein
- Thesis: Recent growth in the job market has caused unemployment to drop below the critical NAIRU [non-accelerating inflation rate of unemployment], causing upward pressure on wages. The Bureau of Labor Statistics calculates that in 2005 compensation per hour for non-farm non-supervising workers was up 5.5% over 2004
by Bill Alpert
- Highlighted companies: ViaSpace (OTCBB: VSPC)
- Thesis: Retired four-star general and former presidential candidate Wesley K. Clark joins the board at ViaSpace, an OTCBB stock with very questionable management and operations. Wes Clark resigns his directorship two weeks after signing on. ViaSpace appears to be involved -- to the tune of over $500,000 -- in fees with various penny stock promoters.
Barron's Feature: Restarting the Presses
by Andrew Bary
- Highlighted companies: McClatchy (MNI), Knight-Ridder (KRI), Gannett (NYSE: GCI),
- Thesis: McClatchy's planned purchase of Knight-Ridder will create a newspaper powerhouse. But Wall Street is not impressed with M&A activity among large newspapers because the industry is in decline and it is unclear if M&A costs can be recovered without hurting shareholder value.
Con Ed Pressured by Interest Rates
by Prudential Equity Group
- Highlighted companies:Consolidated Edison (ED)
- Thesis: Prudential Equity Group has downgraded ConEd to Underweight from Neutral Weight due to valuation concerns, and sets a target price of $40. Prudential believes ConEd's bond-like 5.3% dividend yield causes the stock price to be sensitive to rising interest rates. Because ConEd pays out 78% of its income as dividends, it has limited ability to finance growth internally or issue debt that could jeopardize dividends. Therefore ConEd finances growth via public equity offerings, Prudential believes that ConEd will try to raise $450 million in 2006, which will lower EPS because of dilution.
- Quick comment: Consolidated Edison has paid dividends since 1886, with one omission in first quarter of 1974.The omission of the dividend resulted in several angry shareholders being ejected from the 1974 shareholders' meeting after attempting to attack the company's chairman. Since 1974 the company has raised dividends each year, making the company a "Dividend Aristocrat" with a 32 year record of increased dividends.
Plugged In: Have We Got A Job For Jobs
by Mark Veverka
- Highlighted companies: Disney (DIS)
- Thesis: Mark Veverka proposes that Steve Jobs become Chairman of Disney. He feel's that Jobs's understanding of media and technology is what Disney needs at the top. Steve Jobs will also be Disney's largest shareholder with 7% of the company as a result of his ownership in Pixar (PIXR). However Veverka wonders if Jobs is too hands-on to be an effective board member
- Quick comment: Historically, Steve Jobs is known for not playing particularly well with the boardroom, as Jobs' greatest quality is his "vision thing" which is not a item that board members typically apply in their role as overseers for shareholders
Buoyant Bed Bath and Beyond
by Prudential Equity Group
- Highlighted companies:Bed Bath and Beyond (BBBY)
- Thesis: Prudential Equity Group has upgraded Bed Bath & Beyond Inc. (BBBY) to Overweight from Neutral Weight and set a price target of $46 based on strong fundamentals and an attractive relative valuation. BBBY is achieving both top line and bottom line growth, driven by increased same store sales. Prudential feels that BBBY is trading at a discount relative to other players in specialty retail.
- Quick comment: Based on the "thread count war" that broke out between Wal-Mart Stores, Inc. (WMT) and Target Corp. (TGT) over which store had the highest qualilty (thread count) sheets and pillowcases, demand for higher end soft goods seems strong. Starwood Hotels & Resorts Worldwide, Inc. (HOT) has been quite successful with their Westin at Home website which sells soft goods used at Westin five star hotels.