HALISTER: BARRON’S ROUNDUP: Bullish on American Airlines, Interpublic, S&P

BARRON’S ROUNDUP: Bullish on American Airlines, Interpublic, S&P

(Bloomberg) -- American Airlines Group Inc., which fell more than 6% last week after the attack in Brussels, is “insanely profitable” and a buy after the collapse in oil prices, Barron’s said in the March 28 issue.
  • The airline earned $6.3 billion on sales of $41 billion, increasing its net profit margin to 15% last year from 10% in the previous year.
  • American has used the windfall to buy back $3.6 billion of its shares, or about 10% of the total. The stock is cheap, trading at 3.7 times trailing 12-month earnings.
Other highlights from this week’s Barron’s (subscription required):
  • Interpublic Group (IPG), which owns advertising agencies and public relations firms, may rally more than 20% in a year as it takes advantage of a changing media landscape, Barron’s said. Interpublic won new business from Coca-Cola (KO), Johnson & Johnson (JNJ) and CVS Health (CVS) last year.
  • Zimmer Biomet Holdings (ZBH), a maker of hip and knee replacement joints, may rally as much as 25% in the coming year after realizing synergies from the takeover of Biomet by Zimmer Holdings. The stock trades at 12 times estimated 2017 earnings, an almost 25% percent discount to its peer group, Barron’s said. Zimmer could generate 3% revenue growth later this year, up from less than 1% now.
  • Earnings growth in the S&P 500 may reach more than 10% this year since the companies no longer face the headwinds of a strengthening dollar as they did in 2014-15, according to an interview with Ross Margolies, founder of Stelliam Investment Management. He’s also bullish on Anadarko Petroleum (APC), Delta Air Lines (DAL) and Staples (SPLS).
  • Regional banks KeyCorp (KEY) and Talmer Bancorp (TLMR) as well as mortgage insurer Radian Group (RDN) may be buys, Barron’s reported. The companies received “extremely bullish” scores in a ranking of insider buying activity by researcher InsiderInsights.
  • Investment-grade corporate bonds are a buy as a June interest rate hike seems likely if the economy continues to improve, Barron’s said. High-grade company bonds offer an attractive yield at 5%, well above the less than 2% earned by investing in 10-year Treasuries.
Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
AAL US (American Airlines Group Inc)
KO US (Coca-Cola Co/The)
IPG US (Interpublic Group of Cos Inc/The)
APC US (Anadarko Petroleum Corp)
DAL US (Delta Air Lines Inc)

People
Ross Margolies (Stelliam Investment Management LP)

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