Barron's Summary

Barron’s profiles Waste Mgmt (WMI), saying that the co’s stock is off 5% this year, to 35, or an appealing 18x expected earnings. It could rally into the mid-40s as the co meets or exceeds earnings ests.

According to the Barron’s few stocks are as cheap as oil drillers', which sell for single-digit multiples. Strong fundamentals, takeover activity and more generous dividend policies could lift the shares sharply. Stocks mentioned include Transocean (RIG), Diamonf Offshore (DO), GlobalSantaFe (GSF), Noble (NE) and Ensco (ESV).

Joy Global's (JOYG) shares should rise as coal and electricity operators rumble back from a flat '06 and global commodity demand bounds ahead. The stock could recover by 30% or more.

“The Trader” section discusses potential merger between TD Ameritrade (AMTD) and E*Trade (ETFC). Both co’s were hammered after they trimmed their ‘07 forecasts. But trading activity could turn swiftly, and the prospect of consolidation helps put a floor beneath stock prices. By Sandler O'Neill analyst Richard Repetto’s reckoning, Ameritrade's and E-Trade's compatible strategies bode well for a union. Both have sought to reduce their reliance on online trading and grow their higher-margin asset-gathering businesses. But "the redundancy of the 2 firms' efforts to effectively 'touch' their clients is obvious," he says. Given their complementary operations, a conservative trim of 15% of combined expenses would nudge pre-tax profit margins to 59%, he ests. A merger would create a formidable foe for the far larger Schwab (SCHW). Mgmts of Ameritrade and E-Trade clearly are open to the notion; the 2 dallied on and off before Ameritrade merged with TD Waterhouse in ‘05. TD Bank (TD) which controls more than a 1/3 of Ameritrade's shares, must be willing to go along, but a few more qrtrs of flubbed profits might make saying yes a lot easier.

“The Trader” section also highlights Domino’s Pizza (DPZ), which last week served a plan to buy back $200m worth of stock, and a one-time $13.50 a share dividend. To help pay for the dividend and buyback, the co last week completed a $1.85bn recapitalization that loaded more debt onto its balance sheet. That may not be such a sure thing. For a start, Domino's does not enjoy strong pricing power. Margins will be further threatened by high corn and wheat prices that affect almost every ingredient in pizza. Corn and wheat inventories are already at their lowest levels since the early ‘70s, and prices are projected to climb further. Last year, Domino's SSS declined for the first time in more than a decade, and analysts' projections for a 3% sales rise this year might prove too rosy. Last week, Bear Stearns analyst Joseph Buckley downgraded the stock, which he says was trading "reasonably close to fair value." He was also "apprehensive" about 1Q earnings. Shares trading at 33 will drop to 19.50 once the stock goes ex-dividend, and that lower dollar value might tempt bargain hunters. But Domino's debt load will be 7x ‘07 EBITDA of about $261m, Buckley notes. And its EV is 10x higher than ‘08 EBITDA. Domino's buyback might support the stock in the short term, but any further upside will now take a lot longer to show up.

“Follow Up” section highlights Vertex (VRTX), which has the leading experimental hepatitis drug, Telapravir, which inhibits an enzyme essential to the hepatitis C virus. Telapravir's rapid effectiveness in early trials sent shares above $45 last year, valuing Vertex as if it would have a near monopoly on treatment of HCV infections. Vertex seems to have a good drug in Telapravir, and is running excellent clinical studies. But its hepatitis business prospects are more realistically valued, since its shares have pulled back. "We see this as being a very crowded marketplace," says Jason Kolbert, of Susquehanna.

“Technology Trader” highlights Neurochem (NRMX), which shook up its fans last week. The co announced that its statistical consultants had suggested the co adjust the statistical model originally chosen for analyzing its pivotal clinical trial of Alzhemed, a drug aimed at stemming the memory-eroding progress of Alzheimer's. "An obvious interpretation of this news is that Alzhemed did not demonstrate a large effect," CIBC analyst Brian Lian told clients, "leading to extensive subset analyses." Other analysts axed their tgts for the stock. The co's release seemed to warn investors that Alzhemed's test performance might be damped by "potential confounding factors such as the effect of concomitant medications, baseline characteristics of the study population or differences in clinical sites." But the full assessment of the study won't be completed until around June. Some investors have long doubted the prospects of Alzhemed, selling short the shares of Neurochem after early trials of the drug failed to show a clear effect. Yet Alzhemed is the furthest along of a new generation of potentially disease-altering treatments for Alzheimer's. Others testing treatments include MYGN, ELN and the drug giants LLY and WYE.