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  • Barron’s Summary May 14, 2011  0 comments
    May 16, 2011 9:12 AM | about stocks: ARUN, BBBB, BRP, CSCO, EXPE, HAR, HD, INTC, JNPR, MSFT, RST, SD

    HedgeFundLive.com

    • ’12 elections – Barron’s looks at all the prospective GOP candidates and concludes that Mitch Daniels may have the best chance against Obama.  However, the article is very skeptical of any Republican winning and says Obama would likely win a second term.
    • JNPR – pos. comments; the stock could have 20% upside to $50; JNPR is growing faster and taking share vs. its big peers, inc. CSCO.
    • BBBB – neg. comments; the stock is very expensive and the co is losing market share; aside from it being taken over (it has acknowledged having received strategic offers), the stock price could have downside to $30.
    • ARUN – cautious comments; the co has a lot of fundamental momentum but is pretty expensive.  The co reports earnings this Thursday.
    • MSFT – investors increasingly frustrated w/Ballmer; the deal announced this week is just the latest example of the co misallocating capital.  Investors would like to see more R&D around the core business and a higher payout ratio.
    • INTC – pos. comments; the Trigate technology will keep INTC ahead of its peers; the battle against Arm may not start until next year.
    • CSCO – mixed comments; stock is cheap but its problems could take several qtrs to fix.
    • ADBE – pos. review of the new CS 5.5.
    • EXPE – positive comments; the stock could have upside to at least $30; valuation is cheap and the spinoff of TripAdvisor could be a positive.
    • RST – pos. comments; sentiment is very negative; valuation is cheap; the co has $6/shr in cash; a shift to a subscription model could wind up paying off.
    • HD – pos. comments; the stock could have upside to the mid $40s.
    • HAR – positive comments; the stock could have upside into the low $60s; fundamentals remain strong and valuation is reasonable.
    • EXPE: Expedia is mentioned positively by Barron’s. The article cites valuation, the pending spin off of Trip Advisor, and how Google Places may not be as big of a threat to Trip Advisor as feared, saying, “Google’s ambitions frequently exceed its triumphs”.
    • Commodities – Barron’s says the fundamental picture for commodities over the long term hasn’t changed despite the slide in the past two weeks. The article says oil demand is still prevalent and gold is still rare. Barclays was quoted saying there is little in the incoming fundamental data that suggests any turning point in demand.
    • SD – Barron’s is positive on the stock, saying that oil should generate 80% of the company revs, much more than 20% three years ago. The company also is looking to increase production by 66%. While the company looks expensive on a P/E basis, the company lookis cheap on a P/CF ratio. Barron’s notes that SD’s low-cost model makes it one of the best producers in the business, being able to earn 40% in return on its wells event w/ $60 oil.
    • BRP – Barron’s is positive on the homebuilder, saying it is cheap on a P/E and P/BV basis. It also gives investors exposure to a growing homebuilding market in Canada. The stock also trades at a discount to DHI, PHM, and TOL as it trades at 1.1x P/BV, while the others are around 1.3-1.4X.
    • Crude ETFs – Barron’s says investors looking for an extra advantage in 2H11 should buy BNO, which is the USO’s younger sibling. BNO s different in that it only purchases brent futures. Because brent futures are currently in backwardation, the fund is getting about a 7% pricing benefit, while the USO is losing 6% in pricing due to contango.

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    Stocks: ARUN, BBBB, BRP, CSCO, EXPE, HAR, HD, INTC, JNPR, MSFT, RST, SD
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