Sunday, September 09, 2007

Barron's Summary (BRKA, F, XTO, VE, IDT, MAT, ATHR)

Barron’s cover story lines up 100 most respected co’s. Nr1 Is Berkshire Hathaway (BRKA, BRKB), nr2 is J&J (JNJ) and nr3 is Toyota (TM).

An interview with Ford (F) CEO Alan Mulally. Mr. Mulally says that the co is looking strategic alternatives for Volvo. The co expects to become profitable in ’09 and grow profits after that. CEO also suggests that worldwide there is overcapacity and expects the mkt to consolidate.

Barron’s highlights XTO Energy (XTO), saying that although co's prospects outshine those of some of its rivals, its shares trade in line with its peers'. Also, XTO’s sizable proven natural-gas reserves eventually could make it a takeover tgt.

Though the stock of Veolia Environment (VE) has fallen more than 12% since May, it should soon resume its long-term ascent, thanks to big contract wins and strong earnings.

IDT's (IDT) wireless spectrum, possibly worth $1.23 a share, plus its net cash of $6.64, add up to $7.87. But even after diving 28% in '07, its stock still trades at $9, making a further drop possible.

“The Trader“ column discusses Mattel (MAT), which announced 3rd recall in nearly a month. Mattel shares ticked up after the news and ended the week flat, helped no doubt by bargain hunters betting that the bad news must have peaked. Still, investors might want to wait. For one thing, toxic imported toys have quickly caught the eye of both politicians and protectionists, and the noise surrounding this cause du jour will reach a crescendo Sept. 19, when Mattel execs testify before Congress. This could lead to "more stringent toy-industry regulation and testing requirements, imposing higher operating costs on Mattel and other toy co’s," notes Oppenheimer analyst Linda Bolton Weiser. The co will also have to set aside more of its budget to handle potential litigation that may arise. And the negative publicity heading into the crucial holiday season will require heftier advertising expenses to scrub the taint and win back flustered parents. Mattel shares could get marked down further before Christmas.

“The Trader” also highlights Atheros Comm. (ATHR), whose shares have slipped 15% from their mid-July peak. AmTech analyst Shaw Wu last week slapped a Buy rating and a 40 price tgt on the stock. Among other things, he expects rev to reach $1bn in 2-4ys. Consumer electronics devices now account for just 3-5% of rev, and could morph into the biggest growth driver for years to come. In fact, Wu thinks Atheros is "well positioned" to garner a 10% share of a mkt that could reach $10-12bn by 2011. Atheros shares have climbed steadily over the past 2ys. At 29, shares are trading at 22.7x forward earnings. The co has nearly $4 a share in net cash and no debt. Competition from other chip makers has always worried investors, but Atheros has carved out a niche by focusing on small, cost-competitive products within the Wi-Fi and Bluetooth realm. If anything, the fast evolution of Wi-Fi standards increases the likelihood that chip giants might buy a Wi-Fi specialist to round out their offerings.

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