01 May Barron’s Weekend Summary via TradeTheNews.




Canadian cannabis producers are better-known than their American rivals, but that’s set to change with legalization on the horizon Cover Story: Though US cannabis companies such as Curaleaf, Green Thumb Industries, Trulieve Cannabis, and Cresco Labs have licenses to operate in some states, their businesses are hampered by marijuana’s illegality under US federal law, giving Canadian rivals listed on the Nasdaq an advantage—but events are starting to look up for American operators as Washington moves closers to making weed legal, and shares of US operators have gained amid a growth in sales, while those of most Canadian producers are down.


Tech Trader: Positive on AAPL, AMZN, FB, GOOGL, MSFT: The tech giants performed better during the last year than most people expected, and while their shares aren’t the bargains they were a year ago, there’s a case to be made that there are no better stocks to play technology trends such as cloud computing, growth in the PC market, e-commerce, advertising, and chip shortages.


Trader: The market still has a concentration problem—the S&P 500’s five largest stocks make up 21.6 percent of the index, down from 23.9 percent at their peak, but still far bigger than the 18.1 percent reached at the height of the dot-com bubble; Positive on SHW: The paint company stands to benefit from rising prices as inflation goes up, with the biggest question being whether inflation will be transitory or more sustained; Cautious on X, STLD, NUE: Steel prices have gained nearly 60 percent this year, helped by production cutbacks during the pandemic, but they can’t go up forever, and history suggests they are nearing a peak.


Profile: Henrik Strabo, who runs the $721 million Manning & Napier Rainier International Discovery fund, invests in small- and mid-cap international stocks, a universe of about 5,000 companies across developed and emerging markets; Focus is a common theme among the roughly 100 holdings in the fund—these companies aren’t “involved in a million different things, which allows them to become incredibly good at what they do,” says Strabo.


Interview: Lucas White, manager of the GMO Climate Change fund, focuses on companies that benefit from mitigating climate warming or adapting to it, and talks about how the fossil-fuel industry is adapting as the climate issue heats up; he says investors should avoid the electric vehicle market and hydrogen companies.


Features: 1) Positive on AIMC: There are three good reasons to buy shares of the manufacturer of electromechanical power-transmission motion-control products, such as breaks, gears, and clutches—economic growth will increase demand, shifts to automation and re-shoring could provide a secular boost to sales, and the company is paying down debt from a 2018 acquisition; 2) Positive on PGR: The insurance company, a pioneer in employing real-time driving information to price auto insurance policies, consistently gains market share year after year, and “is an unusual corporate creature: a growth company in a slow-growth industry”; 3) Positive on BAC: The firm, led by unassuming chief Brian Moynihan, “may be the best-positioned of the big US banks to navigate both the current climate, in which capital markets reign supreme, and the accelerating post-pandemic economic recovery—even after a 35 percent gain this year, to a recent $41 a share, its stock still looks like a buy”; 4) Digital currencies aren’t yet widespread, but a race is on to get them into circulation as battle lines harden between cryptocurrencies and standbys like the dollar, and more than 85 percent of central banks are investigating digital versions of their currencies, conducting experiments, or moving to pilot programs, according to PwC—with China leading the pack among major economies; 5) Story reports on the dispute over “contingent value rights” that were part of BMY’s acquisition of Celgene—it agreed to pay an extra $9 per share, or about $6B, if three Celgene drugs were approved on time, but the pandemic caused delays, prompting some CVR holders to prepare litigation to force Bristol to pay up.


Follow Up: Positive on CROX: Recent products, such as footwear made in partnership with YUM, have been consumer hits, and the company’s beat-and-raise results show it’s still going strong, and more than just a pandemic play; Positive on FB, GOOGL: Recent earnings reports confirm the two tech giants continue to thrive, largely because digital advertisers have returned to their pre-pandemic habits and are sending most of their dollars to Facebook and Google.


European Trader: Positive on IHG: The hotel company looks as if it has limited upside, because a post-pandemic return to travel is already factored into the price, but investors shouldn’t underestimate potential gains—as the pandemic winds down, the company’s new brands are poised for growth.


Emerging Markets: C’s announcement that it would sell its Indian banking business, part of a worldwide pullback from retail banking, has set off a scramble among a range of potential buyers—including DBS Group Holdings, ICICI Bank, and Axis Bank—a sign of the wide-open prospects for Indian finance beyond the pandemic.


Commodities: Corn has led the rally among agricultural crops, rising more than 30 percent in 2021 to touch its highest prices in nearly eight years, outpacing the rally for wheat and soybeans, which also reached their highest prices since 2013—and the run-up for corn and soybeans may not be over.


Streetwise: The thinking around autonomous driving continues to change, says columnist Alex Eule. “Everyone still talks about our driverless future, but fewer companies want to be a direct part of it. UBER sold its own autonomous vehicle business last December.”


- Source TradeTheNews.com



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