Barron's Recap (4/28/12): Can the Dow Stay Relevant?
This weekend in Barron's online: The Dow Jones Industrial Average is overdue for a makeover, and the prospects for eBay, Thermo Fisher Scientific and Oracle.
"Shake Up the Dow!" by Andrew Bary. Barron's cover story this week suggests that the Dow Jones Industrial Average risks becoming irrelevant if it cannot find a way to include Apple (NASDAQ: AAPL), the world's most valuable company, and Google (NASDAQ: GOOG), the online advertising-and-search behemoth. The world's most famous stock index has not adjusted its component companies since 2009, but the global business landscape has changed since then. Potential candidates for ouster in order to make room? Hewlett-Packard (NYSE: HPQ), Alcoa (NYSE: AA) and Bank of America (NYSE: BAC) suggests the article.
In "Connecting the Dots at eBay," Michael Santoli says that even when companies that pioneer a revolutionary new business manage to evolve beyond their initial business model, the world can be slow to give them proper credit for their progress. However, Wall Street may be ready to bid up the venerable online auction operator eBay (NASDAQ: EBAY). PayPal now dominates the online-payment business, and the company has become a leader in fixed-price e-tailing. These are two of the fastest-growing and highest-return areas in global commerce. The article suggests that Wall Street has belatedly come to recognize eBay's reorientation.
Lawrence C. Strauss's "Brainy Stock, Bright Prospects" takes a look at Thermo Fisher Scientific (NYSE: TMO), the big supplier of laboratory equipment, analytical instruments, diagnostic tools and consulting services. By boosting margins, expanding overseas and carrying out acquisitions, the company may be set to surprise the skeptics. Barron's bottom line: Bulls think that shares, now in the 50s, could hit $70 or more in two years.
"Oracle's Brave New World" by Mark Veverka suggests that the Redwood City, Calif.-based global database giant could see its shares rise 10% -- and possibly much more -- in the next year. Oracle's (NASDAQ: ORCL) move into cloud-based software, which is delivery of software over the Internet, should enhance the company's current offerings and drive new sales, says the article.
The market continues to rise as investors ignore bad news in favor of good, points out Vito J. Racanelli in "Apple and Amazon Help Lift Nasdaq 2.3%." In general, corporate profit reports have been better than recent broad U.S. economic data have been. In addition, stocks that could pay special dividends include Limited Brands (NYSE: LTD), Carnival (NYSE: CCL) and HCA (NYSE: HCA).
- "Investing in Reform" by Beverly Goodman is a profile of Richard Breeden, former SEC chief and founder of Breeden Capital Management.
- "Is America Becoming an Anti-risk Welfare State?" by Vito J. Racanelli is an interview with economic and financial historian Niall Ferguson.
- Carl B. Weinberg's "How Europe Is 'Unfixing' Its Problems" is an article from the Eurocrisis Discussion Group at the Department of Economics, New York University.
- "Mind the GAAP" is an editorial commentary by Thomas G. Donlan
This weekend's online exclusives include the following:
Buy Starbucks (NASDAQ: SBUX) on the dip, recommends Teresa Rivas in "Why Starbucks Investors Shouldn't Be Bitter." The Seattle-based coffee giant's fiscal second-quarter results failed to impress investors, despite better-than-expected per-share earnings and revenues up 15% year over year. And full-year guidance was below consensus estimates.
In "A Slice of Paradise," Richard C. Morais reveals the favorite pizza joint of some of the nation's top chefs. New York City's Motorino Pizza has a menu that may be fancy by Brooklyn pizza standards, but it is a favorite of chefs Scott Popovic and Lee Anne Wong.
"JPMorgan: Stocks Should Benefit in Less Risky Times." While investors may be spooked by the uncertainty over the deterioration in Europe, JP Morgan Chase (NYSE: JPM) expects the S&P 500 index to gain in second quarter, thanks to an improving economy and "less downside surprise to manage."
Columns in this weekend's Barron's discuss:
- The Walmart (NYSE: WMT) corruption scandal
- Whether the market deserves the benefit of the doubt
- Propaganda on the White House website
- Exxon Mobil's (NYSE: XOM) dividend boost
- Amazon.com's (NASDAQ: AMZN) earnings
- ETFs for squeamish investors
- Government's shrinking share of GDP
- And more ...
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Tags: Alcoa, Amazon.com, Apple, Bank of America, Barron's, carnival, Dow Jones Industrial Average, EBAY, Exxon Mobil, Google, HCA, hewlett-packard, JP Morgan Chase, Larry Ellison, Lee Anne Wong, LIMITED BRANDS, Motorino Pizza, Oracle, PayPal, Richard Breeden, Scott Popovic, Starbucks, thermo fisher scientific, Walmart