Sunday, December 17, 2006

Barron's Summary

Barron’s cover story highlights the world’s cheapest big stock – ConocoPhillips (COP). Right now, ConocoPhillips could be one of the biggest bargains in the energy sector and, indeed, among all of the world's largest publicly traded corporations, even though some analysts haven't yet awoken to the fact. The stock has the lowest P/E ratio among the Dow Jones Global Titans, the 50 largest co’s worldwide ranked by stock-mkt value. "ConocoPhillips is too cheap to ignore on an absolute basis and relative to its peer group," says Robert Marcin, the managing partner of Defiance Asset Management, a Conshohocken, Pa., investment firm that holds the shares. "The stock is unsustainably undervalued if commodity prices stay around current levels." Marcin values the stock at 90. "A valuation at nine times earnings wouldn't be unreasonable when ExxonMobil trades for 12 times earnings," he declares.

Fund manager likes NWS and MBT, dislikes BHP.

Though up sharply since the summer, the shares of Turbochef (OVEN) could climb another 40% over the next year. But the stock is clearly speculative; lots of folks are betting against it.

Trading at around 48, Newfield Exploration (NFX) is a cheap stock. The co expects its production to grow by more than 20% next year, and some investors predict a like-sized gusher for the shares.

For speculators, the shares of NY Community Bancorp (NYB) might be worth a bet, on the chance of a takeover. For income investors, the chance of a payout cut means trouble.

At 33, or 35x estd earnings, Heelys (HLYS) is vulnerable to tripping. If it rallies on Christmas sales, take profits.

“The Trader” section discusses Brink’s (BCO), which has become latest activist hedge fund target, who will join the swelling ranks of investors who want Brinks to consider selling part or all of the co. Late last week, Stanley Works snapped up HSM Electronic, a security-alarm monitoring co, for $545m, a cue for some to re-evaluate Brink's, which has a mkt cap of nearly $3bn. Lehman Brothers analyst Jeffrey Kessler, for one, promptly raised his price tgt to 70 from 65, and said the sum of Brink's parts may warrant a price tag as high as 80.

“The Trader” column also suggests that MasterCard (MA) is pricey. Even in the light of this frenetic shopping week. Its shares have surged 108% since their late-May debut, compared with a 14% climb for American Express (AXP) over the same period. KBW analyst Sanjay Sakhrani assigns a value to MasterCard of about 22x his ‘08 EPS est of $4.44, and 4.5x his forward BV of $20.50. He then subtracts a rather conservative $7 a share for litigation damages to reach a price tgt of 88.

Internet stock fund largest holdings are NAPS and INSP. Jacob Internet fund likes InfoSpace's more than $400m of cash, and says Napster's stellar brand and valuable customer base could be prove attractive to a larger online co or media concern. "There are a couple of co’s that could take fliers on Napster," Ryan Jacob says.

1 comment:

Brian said...

Great work on these summaries! It must take you time to put these together, but it's really helpful, thanks.