German property stocks have had a good year, which reflects two things: (1) strong dynamics in German property, primarily based on solid economic growth (ECB forecasts ~1.6% real GDO growth through 2018) and (2) negative ECB deposit rates, which lower financing costs for developers and landlord while also forcing institutional buyers (insurance companies, pension funds and asset managers) into real estate in an attempt to preserve returns.
As the post Brexit global rush for yield over the summer drove some names in this peer group, such as Deutsche Wohnen (OTC:DWHHF) and LEG Imoblilien (OTCPK:LEGIF) ((LEG on the German stock exchange), to significant premiums to Net Asset Value (NAV), investors faced the question of how long to hold onto the rope. However strong the economic backdrop, it is always harder to buy property stocks above 1x NAV given this requires supportive outcomes over the midterm.
Very recently, the backup in sovereign yields across developed markets combined with talk of a reduced rate of asset purchases by the ECB has triggered some profit taking in German real estate stocks. This has bought leading stocks back to less challenging valuations. A short time ago I wrote about Deutsche Wohnen in this context. Investors should also know about LEG Immobilien. The White line in the chart below is LEG’s market cap, the green line its estimated NAV. As you can see, for the first time in a long while, investors can buy LEG below NAV.
best stock picks: Apartment Investment and Management Company(AIV)
- [By Ben Levisohn]
Scripps Networks Interactive (SNI) sunk to the bottom of the S&P 500–narrowly beating out Apartment Investment and Management (AIV)–as the parent company of the Food Network and other channels gave back a chunk of its post-elections gains.
- [By Ben Levisohn]
Apartment Investment & Management (AIV) tumbled today, as the weakness in real-estate investment trusts following Donald Trump’s surprise election continued today. It was the second-biggest loser in the S&P 500 today.
Shares of Apartment Investment & Management dropped 4.1% to $41.03 today, while the Real Estate SPDR Dow Jones REIT ETF (RWR) fell 1.1% to $90.03. The S&P 500 rose rose 0.8% to 2,180.39.
In a note released yesterday, Raymond James analyst Buck Horne and team cut their price target on Apartment Investment & Management to $50 from $50, even as they maintained their Strong Buy rating. They explain why:
Prefacing our comment qualifying the significant economic uncertainties that have arisen post Tuesdays election, we are maintaining our Strong Buy rating onApartment Investment & Management shares while slightly adjusting our target price (to $50 from $52) and net-asset-value estimate (down $1 to $48.51/share). These adjustments are solely to reflect slightly more conservatism in our cap rate assumptions following the post-election interest rate shifts. We continue to find Apartment Investment & Managements risk/reward profile compelling in this environment as its diversified class B-priced portfolio should prove more resilient to supply pressures and benefit from the growing shortage of affordable workforce housing. In an inflationary environment with potentially declining housing affordability, we are particularly attracted to Aimcos price points, demographics, and balance sheet full of long-dated, non-recourse, fixed rate leverage.
Apartment Investment & Management reported net income of $67 million on sales of $978 million in 2015.
best stock picks: PACCAR Inc.(PCAR)
- [By Jim Cramer]
PACCAR INC has improved earnings per share by 16.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PACCAR INC increased its bottom line by earning $3.82 versus $3.30 in the prior year. This year, the market expects an improvement in earnings ($4.58 versus $3.82).
- [By Vikram Nagarkar]
NVIDIA has also recently announced several partnerships lately, like the one with Microsoft,dubbed Olympus, aimed at maximizing GPU performance for data centers. Then there are also other partnerships in the self-driving cars space, like the one with Bosch, and another one with PACCAR (NASDAQ:PCAR), to develop autonomous trucks. Of course, most of these partnerships will most likely take a while before they can translate to any monetary benefits for NVIDIA. What these deals do, though, is reinforce NVIDIA’s grip over this market, which even pushed Intel (NASDAQ:INTC)to acquire Mobileye (NYSE:MBLY), to build a presence in this space. Mobileye is the company that lost business from Tesla Inc (NASDAQ:TSLA)to NVIDIA last year. Putting that aside, more importantly, the price that Intel is paying to acquire Mobileye has indirectly pointed to the fact that NVIDIA may be significantly undervalued.
- [By WWW.THESTREET.COM]
In the Lightning Round, Cramer was bullish on Salesforce.com (CRM) , Paccar (PCAR) , Cummins (CMI) , ConocoPhillips (COP) , Adobe Systems (ADBE) , Annaly Capital (NLY) and Hewlett Packard Enterprise (HPE) .
- [By Laurie Kulikowski]
We rate PACCAR INC as a Buy with a ratings score of B-. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company’s strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, notable return on equity, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
- [By Jim Cramer]
Despite the weak revenue results, PCAR has outperformed against the industry average of 21.6%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue has not hurt the company’s bottom line, with increasing earnings per share.
best stock picks: Arista Networks, Inc.(ANET)
- [By Lisa Levin]
Shares of Arista Networks Inc (NYSE: ANET) got a boost, shooting up 17 percent to $117.47 after the company reported better-than-expected results for its fourth quarter and issued a strong outlook for the current quarter.
- [By Simon Erickson]
Arista Networks (NYSE:ANET) founder/Chairman Andy Bechtolsheim became a Silicon Valley legend after being one of the first investors in the company now called Alphabet (NASDAQ:GOOGL), cutting the company a $100,000 check in 1998 before it had even formally selected a name (he confirmed this investment has personally netted him more than $1 billion).
Arista’s customer count has increased sixfold during the past four years (from 570 in 2011 to more than 3,500 today) and their market share in high-speed data center switching has increased from 3% to 12% during the same time frame. Bechtolsheim owns 19% of Arista’s shares, with insiders collectively owning more than 44%. Due to massive amounts of data being transferred across the Internet (thanks to high-definition video, genomic sequencing, and a ton of other formats), investment in cloud-computing infrastructure is estimated to grow from $32.6 billion in 2015 to $53.1 billion by 2019.
- [By Billy Duberstein]
Furthermore, if the company were thinking along these lines it would be due to competitive pressures. For years, Cisco’s switching software was only available on its own high-margin hardware; however, the data center switching industry is changing, as competitors like Arista Networks (NYSE:ANET) are winning market share by offering low-cost switches with high functionality. In the past year or two, though, an even greater threat to the industry has emerged, as smaller networking companies started selling stand-alone software that could be run on low-end “whitebox” switches made by low-cost Asian vendors.
- [By WWW.MONEYSHOW.COM]
My Top Pick for growth investors in 2017 is Arista Networks (ANET), which in many ways looks like the next Cisco (CSCO) — the company was built from the ground up to deal with the realities of the new networking paradigm.
best stock picks: Dominion Resources, Inc.(D)
- [By Justin Loiseau]
Dominion (NYSE: D ) added its name to the short list of U.S. companies approved to export LNG to non-Free Trade Agreement countries around the world. Its $3.6 billion Cove Point plant in Maryland will flip the facility’s focus on its head from imports from across the globe, to exports to India and Japan.
- [By Ben Levisohn]
Iron Mountain has gained 2.6% to $26.55 at 3:05 p.m., making it the fourth-best performer in the S&P 500, ahead of WPX Energy (WPX), which has gained 2.4% to $19.94, Pinnacle West Capital (PNW), which has gained 2.3% to $53.55 and Dominion Resources (D), which has risen 2.1% to $59.85.
- [By David Dittman]
But power generators across the country, including Dominion Resources Inc (NYSE: D) in Virginia and Southern Company (NYSE: SO) in the Southeast, are taking significant steps to boost their solar capacity.
- [By Jim Jubak, Senior Markets Editor, MoneyShow.com]
A big part of that is Wednesday’s news that the US Department of Energy had approved a permit for Dominion Resources (D) to export liquefied natural gas from an existing liquefied natural gas import terminal in Maryland.
- [By Lisa Levin]
Tuesday afternoon, the utilities sector proved to be a source of strength for the market. Leading the sector was strength from National Grid plc (ADR) (NYSE: NGG) and Dominion Resources, Inc. (NYSE: D).
- [By Shauna O’Brien]
JP Morgan reported on Friday that it has raised its rating on energy producer Dominion Resources, Inc. (D).
The firm has upgraded D from “Neutal” to “Overweight,” and has given the company a $68 price target. This price target suggests a 12% increase from Thursday’s closing price of $59.78.
Analysts see midstream growth and its MLP formation adding value to existing assets.
Dominion Resources shares were up $1.02, or 1.71%, during pre-market trading Friday. The stock is up 15% YTD.