Sunday, August 22, 2010

Barron's Saturday Summary... - Barron's cover story is on potential bargains in luxury real-estate, specifically summer homes tha...more... (related CHE TMO TGT SHLD WM.OLDT )

Saturday, May 23, 2009 9:36:59 AM
 Barron's Saturday Summary
- Barron's cover story is on potential bargains in luxury real-estate, specifically summer homes that have suffered sharp declines in values ranging from 20% to 30% from the heights achieved in 2007. Sellers across the country are seeking to lure buyers by lowering prices further. Fiserv Lending Solutions, a research firm in Cambridge, Mass: "Prices for luxury summer homes -- generally defined as houses of $3M and up -- could come down another 5% or 10% before bottoming with the broader realty market by the end of this year...That would still leave the segment less bruised than the overall housing market; prices there fell 24% from mid-2007 through the end of last year and are likely to fall another 15% this year". The luxury summer home market has held up in price due to the locations outside the most impacted real estate markets of Florida, Southern California, Las Vegas and Arizona. Jan Reuter, managing director of residential real estate at U.S. Trust:"Some buyers have already started venturing back into the market. Real-estate purchase volume among U.S. Trust clients, who have net worth's of at least $5 million and investable assets of at least $3 million, increased 60% in March and April over the last two months of 2008. For second homes, volume increased by 200%, and we are seeing a big increase in inquiries."

- Barron's is positive on Chemed (NYSE: CHE), a diversified conglomerate including business in hospice care and the "Roto-Rooter" plumbing service. The company trades at 23% discount to the healthcare services sector due to investors wariness about exposure of the plumbing unit to the troubled housing market. Barrons suggests CHE could benefit from doing a tax-free spinoff of the plumbing unit or Vitas hospice operations. "Both Vitas and Roto-Rooter are solid businesses that are undervalued," says Barrons, noting Roto-Rooter limited its revenue decline to 0.2% last quarter by raising prices, and Vitas managed to grow revenue 5% thanks to longer patient stays. Michael Wiederhorn, analyst at Oppenheimer comments that shares could trade at $52 within 12-18 months.

- Barron's is positive on Thermo Fischer Scientific (NYSE:TMO), company which sells a comprehensive array of laboratory equipment, instruments, supplies and services to the health-care, biotechnology, university and industrial sectors. The stock has declined by more than 60% since 2008 and has remained mostly flat during the recent rally due to less aggressive earnings forecasts. Barron's says: "There remains room for investors to discover, or rediscover, the stock, which seems not to hold much downside risk in view of Thermo's balance-sheet strength. If there's increasing confidence that the company can reassert its growth path, the shares would easily merit a 14X PE or better, which could push the stock up into the mid-40s as 2010 rolls into sight."

- Barron's looks at proxy battle between Target Corp (NYSE: TGT), a retailer giant and Bill Ackman, head of Pershing Square Capital Management, which lost 80% of its $2.0B bet on Target derivatives and stock. Ackman its trying to force his way into the Board of Directors, seeking for Target to sell its credit card operations and values Target's real-estate portfolio at $40B, as sale-leaseback would generate $1.4B of revenues for REIT type vehicle. Richard Sokolov, president of Simon Property Group, comments "Transferring all of this real estate would constrain Target's flexibility to make renovations, expansions and enhancements that are part of the ongoing evolution of any retailer." Target currently trades at 14X projected FY09 EPS of $3.00/shr and it's the only counterweight for Wal-Mart (WMT). Michael Exstein, a retailing analyst at Credit Suisse has $50.00 target on the stock. Barron's says "One of the most successful retailers in America, Target is a buy at 41. Ackman's plan to unlock the company's real-estate value may be a sell."

- Barron's is cautious on Sears Holdings (SHLD), a combination of the Sear's department stores and Kmart discount retailers. Sears Holdings is struggling even in a period when other discount retailers are gaining business (SHLD Q1 SSS -7.4%, compared to Wal-Mart SSS +3.7%). Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment advisory: "I see no sign whatsoever that Sears is on track. When you've had comp-stores sales negative for eight years [at K-Mart], the business has not changed." Eddie Lamptert's strategy of buying back shares and closing stores is backfiring as both Wal-mart and Target are expanding their chains. Barron's recommending investors to sell the stock following recent surge in stock price.

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