Barron's Summary (SPWR could double; PCL - Timber!; AKAM, JDSU)

Barron’s cover discusses food producers, with P/E ratios below the median P/Es of the past 10yrs, and most have secure and growing dividends. Nestlé (NSRGY) and Kellogg (K) are standouts owing to attractive valuations and solid growth prospects. (CPB, CAG, GIS, HNZ, HSY, KFT, WWY)

The stock of International Speedway (ISCA), which has skidded badly since last summer, could jump about 20%, to 50, as the company leaves some problems behind and benefits from long-term TV contracts.

At 38.70, or 17 times earnings, Femsa's ADRs (FMX) are cheap. Some fans think the stocks could be worth about 50, while a sum-of-the-parts analysis suggests a price of 64.

According to the Barron’s, in a one year span, best stock picker is Bear Sterns, with 2007 return of 21.98%. In a 6mo span, also Bear Sterns beat others with 12.08% return. While Goldman Sachs leads 3y and 5y lists with 55.39% and 150.91% returns, respectively. Morgan Keegan focus list lost a painful 17% in the 2H07.

SunPower's (SPWR) stock was cut in half after the solar bubble burst. Now it could double, with earnings growing 40-50%. The US Senate tried to attach an extension of the solar tax credit to the economic stimulus bill, but it failed to pass. While an extension could be reintroduced anytime, it most likely will be part of a package considered in the 4Q that would extend the wind and solar tax credit and the R&D tax credit, and apply a "patch" to the dreaded alternative minimum tax. "There's so much bipartisan support for the wind and solar package" that there's an 85-90% chance it gets passed by yr end, says Daniel Clifton, of Strategas Research Partners.

“The Trader” column highlights Plum Creek Timber (PCL), saying that the co’s 4.1% yield is not too shabby in an era of declining bond yields and slashed interest rates. Decimated demand has hurt lumber prices, but Plum Creek was able to sell land to prop up profits. New construction and remodeling use up about 40% of timber volume produced, but nearly 2/3 of it in dollar value, and a prolonged housing slump will hurt. Yet Street analysts seem to have factored in only a brief blip in profit growth, expecting EPS to pull back to $1.26 this yr before promptly rebounding to $1.52 by ‘09. The board recently announced a 42c qrtrly dividend, but option prices have begun to anticipate a possible trimming of the payout to 29-37c by mid-Aug. Jim Grant, of Grant's Interest Rate Observer, recently tried to steer timber-REIT investors toward smaller rival Potlatch (PCH) instead. Among other things, Plum Creek has "much greater exposure than Potlatch to the vicissitudes of real estate development," he notes. Plum Creek looks expensive by any measure. Grant calculates the adjusted EV for each core timberland acre and finds Potlatch offers the better bargain. At 41, Plum Creek shares also trade at 3.8x book value, compared with 2.6 for Potlatch. Shares are also perched precariously at 30x cash flow, compared to about 17x for Potlatch. These numbers yell out a warning: Timber!

Fund manager holds GOOG, DKS, SCHW, CSCO, VPRT, HPQ, GILD, CTSH, UTX and MON.

“Technology Trader” column discusses Akamai (AKAM), whose stock is down 45% over the past 12 mo’s from concerns over increased CDN competition, in particular price-cutting by some rivals. But Akamai last wk reported a blowout DecQ. Demand for the co's service is running high, thanks in no small measure to the proliferation of network-TV shows being streamed over the Internet. Recession? Not in Akamai's universe. "I don't think ppl can afford to cut back on Internet strategies," CEO Paul Sagan said in an interview. "My guess is that if we see a downturn, it won't have a significant impact on us." Growing at about 40%, and trading at about 20x estd ‘08 earnings, this one looks cheap.

“Technology Trader” also highlights JDSU (JDSU), whose shares are down 90% since they peaked in early 2000. Now there are signs JDSU's turnaround is finally taking hold. In an interview last week, CEO Kevin Kennedy said the co has hit 4 key milestones. First, in Dec the co won a jury trial over allegations of stock fraud related to the mammoth swoon by its stock after the bubble popped. Second, the co hit GAAP profitability for the first time without the aid of one-time asset sales. Third, the co has had 4 qrtrs in a row of positive FCF and EPS growth. And fourth, the DecQ was what Kennedy calls "the first I can remember with simultaneous improvement in GM and revs in all of our businesses." The mkt has finally sucked up most of the existing capacity that was built out during the bubble yrs. "Operators continue to respond to capacity needs and network build-outs," Kennedy says. "There is not a lot of excess capacity. Ppl are not spending money speculatively. They are spending when they can monetize it, or when they are responding to shortages." It's a fiber-capacity play, just like the old days, except now JDSU trades for well under 2x rev. With a P/E of about 20x estd '08 results, it doesn't look cheap. But it is an interesting speculative play on bandwidth growth.