Monday, August 14, 2006

Notablecalls - Barron's summary

Barron's cover story discusses funds. Top fund managers bet on GS, AYE, ECOL, BRKA, TS and PD. One manager has shorted AMZN.

Fund manager picks highlighted, including: NVS, BMY, GSK, BIIB, MEDI, MLNM, CEGE, MEDX, DCGN and IVGN. pans include SGP, DNA and AMGN.

Barron's highlights Whole Foods Market (WFMI), saying that the stock's P/E multiple of 29, though higher than other food retailers', is down from 50 and close to where it was before a powerful rally starting in 2003. "You look back on the history of this wonderful co and it goes through these hiccups," says Jack Robinson, of Winslow Green Growth Fund, who has owned the stock since the early '90s and has been buying up more at recent levels. His prediction: The shares will double in the 3-5 years.

Barron's discusses TALX (TALX), which shares have been pummeled by several negatives. A potentially big one surfaced on June 28, when the co disclosed that the Federal Trade Commission had launched an initial inquiry into whether acquisitions it made had hurt competition in the employment-verification and unemployment-tax consulting businesses. Article suggests that if the FTC inquiry soon goes away, TALX stock could hit 29 in a year. If it lingers, the stock will skid further.

The Trader column discusses Saks (SKS), which is unloved stock among investors. But it has confounded skeptics by getting good prices for its Northern dept stores and Parisian chain. The stock has delivered nice returns in a sloppy tape for high-end consumer names, and looks as though it has room for more. Javier Epstein, president of Renaissance Capital Mgmt, advocated owning Saks last fall and remains a fan. He points out that Saks' divestitures pulled in $2.1bn, 1/3 more than most analysts estd they'd fetch. Including a $4 special cash dividend in May, Saks shares have returned more than 8% since our Nov column. Epstein figures that shareholders have a couple of ways to win. With 54 Saks Fifth Avenue Stores and 50 Saks Off Fifth locations still in hand, the co has a mkt value of $2.1bn, $2.7bn in annual sales and will have $2 a share in net cash once it finishes the sale of its Parisian chain. Mgmt should get Saks' weak cash-flow margin closer to its industry peer levels near 8% and its revs to $3bn, according to Epstein. If it's successful, that equates to more than $300m in cash flow and a hypothetical share price of $23, vs $15.75 recently. Epstein thinks the sale of non-Saks units could make the co attractive to a strategic buyer and not just private-equity types. Real estate alone, mostly the New York flagship store, could be worth $9-10 a share.

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