Saturday, February 1, 2014

Two Barron's Stocks to Watch Monday


Akamai $AKAM could rise over 25%, Barron's says

      Shares of Akami could gain 25%, driven by a growing revenue stream from an
increase of internet traffic through its servers, Barron's contends in a feature
article. [Reference
Bed Bath & Beyond shares are at a cheap entry point, Barron's says
      Shares of Bed Bath & Beyond are trading at a significant discount to
historic levels, Barron's reports in its The Trader column. [Reference

     One company whose most recent quarterly earnings report wasn't sexy is Bed
Bath & Beyond (BBBY), and its stock paid the price. It closed last week at $
63.85, down over 20% from a recent high of $80.48. The shares are now back to
where they were two years ago, but the market is 30% higher since then.
      Earlier this month, the company said that sales in the fiscal third
quarter ended in November rose about 6%, to $2.9 billion. Earnings rose 2%, to
$237 million, and EPS, 8.7%, to $1.12, on fewer shares outstanding.
      But this retailer of domestic merchandise and home furnishings missed on a
few of the Street's quarterly expectations, with earnings per share falling shy
by three pennies. Comparable-store sales at the Union, N.J.-based company
increased 1.3% in the quarter, down from 1.7% growth in the year-earlier period.
Gross margins fell unexpectedly to 39.2% from 39.8%, mostly on higher coupon
redemptions and higher product-acquisition costs.
      The company lowered guidance for the fourth quarter to $1.60-$1.67 from
$1.70- $1.77, and for fiscal 2014, which ends in February, to $4.79-$4.86
from a previous $4.88-$5.01.
      Analyst downgrades and a stock-price whacking ensued. It hasn't helped
that January was a terrible month for stocks in general, and that investors took
out a lot of their frustrations on retail stocks in particular, among the worst-
performing groups. The market has become unforgiving.
      Long-term-oriented investors, however, should ask themselves if Bed Bath &
Beyond is suddenly 20% less the company it was just a few weeks ago. Probably
not, which means this seems like a relatively cheap entry point.
      Alan Lancz, president of a money-management firm of the same name, says
that with the stock below $65 and a price/earnings ratio of less than 12 times
consensus estimates for the fiscal year ending in February 2015, the punishment
is overdone. He recently bought shares for clients.
      By almost any metric, the shares are trading at a significant discount to
historical levels. Bed Bath has more than $3 per share in cash and no
long-term debt. The main knock on the stock is that it offers no dividend.

No comments:

Post a Comment