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Barron’s Summary April 16, 2011

|Includes:Apple Inc. (AAPL), ARO, ARRS, BA

  • Boeing – Barron’s cover story – Barron’s says Boeing has 35% in upside as its 787 Dreamliner begins to gain traction. On valuation, the company trades at a P/E of 17.7, while competitor EADS trades at 24. On a FY12 basis, BA trades at 14X, well below its 10-year avg of 22X. The company also has a 7.3 year order backlog, worth around $256B. Increasing military spending across various countries (Russia, Saudi Arabia, South Korea) is also likely to dampen the US budget cuts for BA.
  • The US has one of the highest effective tax rates in the world, even after loopholes are considered. 
  • GCVRZ – pos. comments on the Genzyme CVR.  Barron’s says it could have upside to ~$3.30-4 (at least 25% above current levels).
  • LBO targets – Barron’s contains potential LBO targets from a recent UBS screen – AAP, ARO, DOX, AEO, ARRS, ARW, AVT, CA, PLCE, PSS, DSW, FINL, GCO, HRS, IM, JBL, LTD, LNCR, MHP, MW, MOLX, JWN, RSH, ROST, SAI, SEE, TECD.
  • Commodities – Barron’s notes that the commodities slide this week was due to sentiment instead of fundamentals, particularly the negative Goldman notes. However, in the end prices will be driven by supply and demand metrics, although Barron’s notes that commods are due for a period of volatility.
  • RIMM – positive comments; the stock could nearly double from here; the multiple is “absurd”; the co. is one of the leaders in the smartphone market and enjoys strong growth and margins.  The co will have new smartphone devices on the market in the coming years w/new ones based on the QNX OS.  RIMM retains a huge share of the important enterprise market.
  • PC – neg. comments; PC sales missed forecasts in Q1 again.
  • GOOG – the stock may “tread water” for the time being.
  • AAPL – the co continues to build out a cloud product and recently hired a senior exec from MSFT; AAPL will prob. offer both consumer and enterprise cloud options.
  • QCOM – positive comments; the stock could have upside into the mid $60s; some concerns around Japan are justified but will be temporary.  Meanwhile co has v strong growth prospects + a cheap valuation.
  • GPS – positive comments; the co is investing to resuscitate its brand; valuation is cheap and the balance sheet is strong (w/ample capacity to buyback stock).
  • Treasuries benefited from a confluence of items, inc. heightened eurozone sovereign fears, the weaker CPI on Fri, and signs Washington has found religion on spending.