A Healthy Wealth ManagerThe business of managing wealth has lost a lot of its pizzazz, and Wall Street is no longer upbeat on the sector. The market's decline since 2007 has driven big money out. But dyed-in-the-wool value players remain high on the group. A top pick: AllianceBernstein Holding (AP), a unit of French insurer AXA. "Industry consolidation is just starting, and quality managers like Alliance are bound to catch fresh attention," says Robert Olstein of Olstein All Cap Value Fund, which has 13 million shares.
With Alliance's assets under management falling to $400 billion in March from $800 billion two years ago, the stock tumbled to 11 from 78 in 2008. Since then, it has recovered to 20.44. Olstein figures Goldman Sachs (GS), JPMorgan Chase (JPM), and Franklin Resources (BEN) are eyeing big asset managers whose stocks are depressed. BlackRock (BLK)'s $13.5 billion purchase in June of Barclays Global Investors signals the start of a merger trend, says Olstein. In a deal, he sees Alliance fetching 45.
Another bull is Craig Siegenthaler of Credit Suisse (CS), who rates Alliance outperform, with a 12-month price target of 27. Cynthia Mayer of Bank of America, who rates the stock a buy, believes Alliance (a client) is undervalued given its large global franchise and above-average yield. It's among the most diversified managers, she notes.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.Nuance: Your Voice CommandsVoice recognition is growing in such lucrative markets as cell phones, call centers, and medical record-keeping. That's sparking interest in Nuance Communications (NUAN), whose stock has hit 12.19, up from 6 on Nov. 20.
Apple's latest iPhone 3GS is equipped with Nuance, with advanced voice-control capabilities. These allow for oral cues in searching the Web or finding cell-phone contacts.
One Nuance fan is William Harnisch, CEO of Peconic Partners, which bought 1.3 million shares. "Nuance has managed quite well in spite of the recession and should do even better over the long term," he says. He sees profits of $1 a share in 2009 and $1.15 in 2010.
Jeff Van Rhee of Craig-Hallum Capital Group (it expects to do business with Nuance) rates it a buy. He says Nuance's projected iPhone sales alone "would imply $9 million in potential revenue each year."
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.The Rally: Coming Soon to Wal-MartWal-Mart Stores (WMT), the world's No. 1 retailer, is a core holding in institutional investors' portfolios. Yet it has had a ho-hum year despite the recent rally. What's going on?
As the market rebounded, banking on a potential recovery, investors "switched from defensive names like Wal-Mart to more discretionary names like Target," says Karl Mills, president of Jurika Mills & Keifer Investment Partners. Result: Since Mar. 6, Wal-Mart has been flat, at 48.37 a share, while the Standard & Poor's 500-stock index gained 34%, and Target shot up 57%. Wal-Mart is now "very cheap," says Mills, near its 52-week low, at 13 times 2010 estimated earnings.
"Wal-Mart will continue to gain share," says S&P's Joseph Agnese, who rates it a strong buy based on his estimated earnings of $3.59 a share in 2010 and $3.90 in 2011, vs. $3.35 in 2009 ended Jan. 31.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.