Barron's Summary

Barron’s cover highlights stocks of co’s that benefit from rapid wealth growth. Those include: AXP - Plastic of choice for the well-heeled; COH - Madly popular high-end accessories; GD - Gulfstream jet demand soaring; FO - Golf clubs and good bourbon; IHG - Hosts to the globetrotting class; LVS - China's new rich jamming Macao; LTM - Play palaces for the suburban affluent; MER - Prime role in handling wealth transfer; MGM - Those who earn a lot often bet a lot; SKS - Stellar brand, company in turnaround; BID - Brokering culture to the hyper-rich; TIF - Those blue boxes are coveted globally; JWN - The apex of national department stores; TXT - Cessna prospering in private-jet boom; and WFMI - Selling virtue and organic kale, for plenty. Article also highlights co’s that serve a cash-strapped lower-income clientele. Those include BIG - Midwest close-out chain is on a roll; DG - Dollar stores gain share selling staples; FDO - Decent top-line growth, strong stock; EZPW - Pawn shops, sadly, are thriving; and FCFS - "Payday loans" profitable, under scrutiny.

Barron’s Roundtable members like EFA, RCS, FRA, LYO, HIG, ACGL, COF, GLW, PXD, EWS, PBR, NBR, YRCW, C, GE, RCL, FD, MEDI, BRL, BHI and SYMC.

The stock of Under Armour (UA), lately 51, is probably worth no more than the low 50s, and could fall much further if the young company stumbles. Competitors are storming Under Armour's market.

A buyout group that won the Clear Channel (CCU) auction stands to make a quick 50% return. But institutional opposition could kill the deal or force the group to boost its bid. Barron's has learned that at least two big institutional holders, including Fidelity Investments, have told mgmt that they will cast negative votes. "The LBO price is wholly inadequate," says Jeff Jacobowitz, of Robotti & Co.

The shares of Manor Care (HCR), off 6% from a high last summer, don't reflect all the improvements at the company. Jim Lane, of Tripoint Asset Mgmt sees the stock climbing 30%, to $65, over the next 18 months.

“The Trader” section highlights Tesoro (TSO), which is sitting on a treasure of cash, probably more than it needs to run the business efficiently. At the end of ‘06, the co will likely end up with about $800M in cash. FBR analyst Jacques Rousseau argues that the best use of the cash is a big buyback of its own shares, say $1bn worth, to take out some 20% of the 67M outstanding. Tesoro hasn't reduced the share count much in recent years, he says, so such a buyback would make a "material" impact on EPS, increasing estd profits about 18% this year by lowering shares outstanding. A similar move by refiner Ultramar Diamond Shamrock in ‘01 led to a 26% rise in the stock price over the next 12 weeks, he points out. With oil and refined-product prices falling, refiners will likely see share volatility in ‘07, and there will be chances to buy back the stock at prices lower than it is now.

The stocks listed here show strong fundamental business trends and above-avg short-term relative strength, which could lead to outperformance in the next few months, according to the Barron’s. SPW, IPG, AQNT, OII, LEH, ASN, MHS, KCI, GD, ADSK and CMCSA.

“Technology Trader” section discusses Cisco (CSCO), which fell 8% last week, after analysts at 3 brokerage firms downgraded the stock from Buy to Neutral. Barron’s argues that analysts jumped off the Cisco wave too early. After all, YouTube hasn't yet started stocking high-definition videos. Video traffic could grow to levels that force widespread upgrades of Internet gear. The article suggests that Cisco still has a few good quarters ahead of it.