Barron’s cover discusses positively Nokia (NOK), saying that driven by an improved lineup of phones and impressive execution, Nokia has regained 3 percentage points of mkt share in just the past yr, giving it a commanding 37% of the global wireless handset mkt. Its closest rival, Motorola (MOT), has stumbled badly, losing seven points of share last yr to fall to 15%. Nokia's stock has jumped by 65% to €24.33 ($33.77) in 2ys. But it's still relatively cheap, at a multiple of 17.5x ‘07 earnings. Consider the valuations given other tech stars: Apple’s (AAPL) shares now trade at a 37 multiple. And RIM (RIMM) has a 43 multiple. Even if Nokia shares climb 35% to €33 in the next 12 mo’s, as Bernstein analyst Paul Sagawa expects, that would still amount to just 13x his ‘08 projection. What investors have failed to realize is just how strong Nokia's position is and how much further the wireless mkt can grow, says Sagawa. "Ppl don't understand how much overall growth there is left in the mobile-handset business, and it's suicide for a smaller player to try to take on Nokia with regards to [product] price," he says. Sagawa looks for Nokia to post "double-digit unit growth without any price declines for some time to come." Nokia's operating margins from mobile devices, he notes, hit 21% in its strong 2Q.
Altria (MO) could rally to 87 in 12 to 18 months from a current 67, as the company buys in shares and cuts costs. Philip Morris USA is moving into faster-growing products like smokeless tobacco, while its international arm is pursuing growth in China.
Radian (RDN) looks to be overestimating the strength of the housing market -- and underestimating its future claims losses. With possible credit downgrades ahead, the stock will be flat or down.
Smart Balance's (SMBL) shares, now above 11, could reach 15 or more within 12 to 18 months. But the real payoff might come later, in the form of a takeover by a large food company.
Recently around 15, shares of Pinnacle (PNCL) airlines could hit 19 within a year. One bull even argues that, if the airline uses prudent leverage, the stock could go as high as 22.
“The Trader” column highlights NBTY (NTY), whose shares have slipped 28% since Feb, as investors bailed out of small stocks. But the co bears no blame for anything other than its utterly forgettable name, and the neglect of sell-side analysts. For a start, the co has a leading share of the vitamin mkt. It also has a pristine balance sheet and no net debt. Earnings have grown at an enviable 24% over the past 3ys, and analysts expect the co to earn $3.03 a share in ‘07. The growth should hold up even in an economic slowdown, since vitamin consumption is not known to decline with condo prices. Also, "the co benefits from the trend of aging baby boomers who take nutritional supplements to maintain their health," Leach says. "The industry is growing by 7-8% a yr, and NBTY continues to gain mkt share."
“The Trader” also highlights Molson Coors (TAP), whose shares have rallied 14% over the past mo. The co has cut costs and exceeded the projected savings from the merger of Molson and A. Coors. More important, sales have continued to climb. As a result, the co expects FCF to increase to about $550m in ‘08, from about $170m this yr. Molson Coors' impressive cash-flow yield has been masked this yr by certain 1x items and purchases that aren't expected to spill over into ‘08. Not surprisingly, mgmt indicated that it is discussing buybacks and dividends with the board. Goldman Sachs analyst Judy Hong expects FCF per share of $6.34 next year, and between $8-9 by ‘09. That's not the only reason to hop to it. JP Morgan analyst Dara Mohsenian sees continued cost cuts and improving Canadian and US mkt share, and regards Molson as a "relative safe haven in a US economic slowdown." At about 93, shares are trading at a moderate 15x forward earnings. For ys, investors have shunned the mature, slow-growing beer mkt for flashier, trendier beverages. But $40 flavored vodka can be a tougher sell when the economic sizzle starts to fizzle, while the humble keg will remain more recession-resistant.
Fund top holdings include PG, PEP, GE, RIG, AIG, PRU, MDR, CSCO, AMX and CMCSA.
Altria (MO) could rally to 87 in 12 to 18 months from a current 67, as the company buys in shares and cuts costs. Philip Morris USA is moving into faster-growing products like smokeless tobacco, while its international arm is pursuing growth in China.
Radian (RDN) looks to be overestimating the strength of the housing market -- and underestimating its future claims losses. With possible credit downgrades ahead, the stock will be flat or down.
Smart Balance's (SMBL) shares, now above 11, could reach 15 or more within 12 to 18 months. But the real payoff might come later, in the form of a takeover by a large food company.
Recently around 15, shares of Pinnacle (PNCL) airlines could hit 19 within a year. One bull even argues that, if the airline uses prudent leverage, the stock could go as high as 22.
“The Trader” column highlights NBTY (NTY), whose shares have slipped 28% since Feb, as investors bailed out of small stocks. But the co bears no blame for anything other than its utterly forgettable name, and the neglect of sell-side analysts. For a start, the co has a leading share of the vitamin mkt. It also has a pristine balance sheet and no net debt. Earnings have grown at an enviable 24% over the past 3ys, and analysts expect the co to earn $3.03 a share in ‘07. The growth should hold up even in an economic slowdown, since vitamin consumption is not known to decline with condo prices. Also, "the co benefits from the trend of aging baby boomers who take nutritional supplements to maintain their health," Leach says. "The industry is growing by 7-8% a yr, and NBTY continues to gain mkt share."
“The Trader” also highlights Molson Coors (TAP), whose shares have rallied 14% over the past mo. The co has cut costs and exceeded the projected savings from the merger of Molson and A. Coors. More important, sales have continued to climb. As a result, the co expects FCF to increase to about $550m in ‘08, from about $170m this yr. Molson Coors' impressive cash-flow yield has been masked this yr by certain 1x items and purchases that aren't expected to spill over into ‘08. Not surprisingly, mgmt indicated that it is discussing buybacks and dividends with the board. Goldman Sachs analyst Judy Hong expects FCF per share of $6.34 next year, and between $8-9 by ‘09. That's not the only reason to hop to it. JP Morgan analyst Dara Mohsenian sees continued cost cuts and improving Canadian and US mkt share, and regards Molson as a "relative safe haven in a US economic slowdown." At about 93, shares are trading at a moderate 15x forward earnings. For ys, investors have shunned the mature, slow-growing beer mkt for flashier, trendier beverages. But $40 flavored vodka can be a tougher sell when the economic sizzle starts to fizzle, while the humble keg will remain more recession-resistant.
Fund top holdings include PG, PEP, GE, RIG, AIG, PRU, MDR, CSCO, AMX and CMCSA.
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