Top 5 Warren Buffett Stocks To Watch For 2017

A number of years ago, Warren Buffett referred to derivatives as "financial weapons of mass destruction." Since then, Wall Street has tried to pooh-pooh this description, but the facts speak for themselves.

See Also: 7 Best Dividend Stocks for a Rocky Market

What is a derivative? Basically, it's a bet couched as a complex financial instrument. Investopedia defines a derivative as "a security with a price that is dependent upon or derived from one or more underlying assets." More simply put, two institutions, usually banks, bet on the direction of an underlying asset, which might be stocks, bonds, interest rates, gold, currencies or indexes. For a more entertaining if depressing explanation, see the movie "The Big Short."

Initially, derivatives were a hedge on a position held by the bank. For example, if a bank had a large portfolio of corporate debt, the portfolio manager might protect that position by using derivatives to take an opposite position, thereby hedging the holdings.

Top 5 Warren Buffett Stocks To Watch For 2017: (VIAB)

Advisors' Opinion:

• [By Ben Levisohn]

  What a difference one word makes. Cowen’s Doug Creutz and Stephen Glagola could have said that it’s not time to panic after Viacom (VIAB) said its negotiations with Dish Network (DISH) have been going nowhere. Instead, they inserted the word “necessarily,” changing the complexion of things. They explain:

• [By Harold L. Vogel]

  *Includes AMC (AMCX), Cablevision (CVC), Charter, Comcast Cable (CMCSA) and networks, Discovery (DISCA), Disney (DIS) cable networks, Time Warner Cable (TWC) and cable networks, Viacom (VIAB) networks.

• [By Javier Hasse]

  The Nasdaq 100 Index surged 0.16 percent, driven by gains at Viacom, Inc. (NASDAQ: VIAB) and Western Digital Corp (NASDAQ: WDC).

  Earnings

  Shares of The Coca-Cola Co (NYSE: KO) lost 4.79 percent on Wednesday, after the announcement of its first quarter financial results. While EPS of $0.45 beat consensus estimates by $0.01, and revenue of $10.28 billion was in-line with expectations, shipment volumes for sodas and other products were quite weak.

Top 5 Warren Buffett Stocks To Watch For 2017: Sanofi(SNY)

Advisors' Opinion:

• [By Ben Levisohn]

  Well, it looks like Medivation (MDVN) now has five suitors after reports that Amgen (AMGN) is joining Pfizer (PFE), Sanofi (SNY), AstraZeneca (AZN) and Novartis (NVS) in considering a bid. Maxim’s Jason Kolbert and Jason McCarthy offer their thoughts:

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  Gainers Genocea Biosciences Inc (NASDAQ: GNCA) shares rose 13.3 percent to $4.08 in pre-market trading after the company presented a new 12 month data on genital herpes immunotherapy GEN-003. Baker Hughes Incorporated (NYSE: BHI) shares rose 8.2 percent to $59.00 in pre-market trading. General Electric Co. (NYSE: GE) is said to be in talks to acquire Baker Hughes, according to sources as reported by Dow Jones on Thursday. A deal could be valued at as much as $30 billion, the sources said. However, Bloomberg later reported that a GE spokesperson said they are is in talks with Baker Hughes regarding possible partnerships, but not an acquisition. Sanofi SA (ADR) (NYSE: SNY) rose 8 percent to $40.20 in the pre-market trading after the company posted upbeat quarterly earnings and lifted its full-year profit forecast. Cirrus Logic, Inc. (NASDAQ: CRUS) rose 6.6 percent to $55.20 in pre-market trading after the company reported better-than-expected results for its third quarter. Alliance Resource Partners, L.P. (NASDAQ: ARLP) shares rose 5.3 percent to $24.75 in pre-market trading following results for the quarter ended September 30, 2016. Its net income in the quarter gained 7.7 percent to $89.8 million. Marvell Technology Group Ltd. (NASDAQ: MRVL) rose 5 percent to $13.78 in pre-market trading after dropping 2.09 percent on Thursday. Community Health Systems (NYSE: CYH) rose 4.4 percent to $5.27 in
• [By Johanna Bennett]

  If Sanofi (SNY) wants to buy Medivation (MDVN), it is going to have to up its bid for the cancer drug maker, perhaps to $63 a share. And that move could open the flood gates to rival offers for the cancer drug maker.

  Or so says Credit Suisse analyst Kennen MacKay, in a note published today.

  We postulate additional potential acquirers such as AMGN, GILD, PFE, AZN, and ROG may be waiting for Sanofi to raise its bid, and anticipate competitive bids may come in if Sanofi raises its bid following finalization of the record date. We continue to anticipate MDVN mgmt. will be receptive to reasonable offers from potential acquirers, and continue to see our takeout TP of $63/share as reasonable, though our conversations with shareholders suggest a higher price may be warranted.

  Reuters

  MacKay isn��t alone in his opinion. Last week, media reports suggested that Gilead and Celgene (CELG) have joined the bidding process for Medivation, one that already includes (maybe) Amgen and of course Sanofi. And analysts have speculated about other potential bids often in recent weeks.

  Late last month, Sanofi called for a vote to replace Medivation’s board after the San Francisco-based biotechnology group rejected the French company’s $9.3 billion bid as too low and refused meetings to discuss an improved offer.

  But Credit Suisse��s MacKay argues that Medivation��s management is willing to negotiate, but sees Sanofi��s per share offer of $52.50 ��as a non-starter for conversations.��

  We continue to see MDVN mgmt.��s refusal to engage with Sanofi as indicative that Sanofi��s bid is too low to begin conversations. We anticipate MDVN mgmt. may be willing to engage in constructive conversations with Sanofi at a higher offer price, and anticipate constructive conversations may move forward with a higher offer price from Sanofi. Our conversations with mgmt. suggest the ��change in control�� provisions with Astellas do not mat

• [By Max Macaluso and David Williamson]

  At the end of last week, a Bloomberg article revealed that Shire (NASDAQ: SHPG  ) and pharmaceutical giant Sanofi� (NYSE: SNY  ) may be circling ViroPharma� (NASDAQ: VPHM  ) . The the following video, from The Motley Fool's health care show Market Checkup, analysts David Williamson and Max Macaluso take a close look at ViroPharma and discuss the recent interest in this small biotech company.

• [By Ben Levisohn]

  Reports suggest that Gilead Sciences (GILD) and Celgene (CELG) have joined the bidding process for�Medivation (MDVN), one that already includes (maybe) Amgen (AMGN), and of course Sanofi (SNY), which is trying to throw out Medivation’s board. Of the three biotech giants, Citigroup’s Robyn Karnauskas and team argue that Amgen is best positioned to win the battle. They explain why:

• [By Monica Gerson]

  Medivation Inc (NASDAQ: MDVN) is said to have spurned recent takeover approach from France's Sanofi SA (ADR) (NYSE: SNY), according to sources as reported by Bloomberg on Tuesday. Sanofi wants Medivation's treatments for hard-to-cure cancers, the sources said. Medivation shares surged 8.46 percent to $49.60 in the after-hours trading session, while Sanofi shares fell 0.59 percent to $42.02 in after-hours trading.

Top 5 Warren Buffett Stocks To Watch For 2017: Arista Networks, Inc.(ANET)

Advisors' Opinion:

• [By Lisa Levin]

  Arista Networks Inc (NYSE: ANET) shares shot up 11 percent to $64.37 after the company reported upbeat results for its fourth quarter.

  Shares of The Chefs Warehouse, Inc (NASDAQ: CHEF) got a boost, shooting up 18 percent to $18.36 on Q4 results. Chefs' Warehouse reported Q4 modified pro forma earnings of $0.26 per share on revenue of $299.7 million.

• [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 Monica Gerson]

  Arista Networks Inc (NYSE: ANET) reported upbeat results for the first quarter and issued a strong revenue forecast for the current quarter. Arista Networks shares gained 3.84 percent to $66.02 in the after-hours trading session.

Top 5 Warren Buffett Stocks To Watch For 2017: Whiting Petroleum Corporation(WLL)

Advisors' Opinion:

• [By Ben Levisohn]

  Stifel’s Michael Scialla and Daniel Guffey warn investors not to chase the biggest gainers among the exploration & production stocks, including Denbury Resources (DNR) and Whiting Petroleum (WLL), and instead stick with more stable fare such as Anadarko Petroleum (APC), Rice Energy (RICE), and Continental Resources (CLR). They explain:

• [By Ben Levisohn]

  Shares of energy stocks, including ExxonMobil (XOM), Chevron (CVX), Whiting Petroleum (WLL), and Devon Energy (DVN), are surging on reports that OPEC has agreed to to limit the amount of oil its members produce. Bloomberg’s Nayla Razzouk,�Grant Smith, and Angelina Rascouet�report:

• [By Andrew Efimoff]

  WTI crude oil plunged 3.11 percent on Friday to $48.99 a barrel. Below are the biggest energy losers for the day:

  California Resources Corporation (NYSE: CRC): -19.22% Dynamic Materials (NASDAQ: BOOM): -12.39% Clayton Williams Energy (NYSE: CWEI): -11.45% Dynergy (NYSE: DYN): -11.91% EP Energy Corporation (NYSE: EPE): -11.20% Mexco Energy (NYSE: MXC) -10.90% Whiting Petroleum (NYSE: WLL) -10.79% Southwestern Energy Company (NYSE: SWN) -10.79% SM Energy Company (NYSE: SM) -10.38% Real Goods Solar (NASDAQ: RGSE) -10.34%

  Posted-In: Commodities After-Hours Center Markets Movers

Top 5 Warren Buffett Stocks To Watch For 2017: Corrections Corporation of America(CXW)

Advisors' Opinion:

• [By Jim Robertson]

  The same can be said of the for-profit education sector which is being regulated out of existence by Obama while so-called ��private prison�� stocks like Corrections Corp Of America (NYSE: CXW) and The GEO Group Inc (NYSE: GEO) are already down around 7% this week alone just on Hillary��s debate comments about them.

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  Gainers Corrections Corp Of America (NYSE: CXW) shares rose 16.3 percent to $16.50 in pre-market trading following Donald Trump's victory. SAExploration Holdings, Inc. (NASDAQ: SAEX) shares rose 15.4 percent to $7.26 in pre-market trading after the company reported a new $35 million deep water ocean-bottom marine project award. The GEO Group Inc (NYSE: GEO) shares rose 12.9 percent to $26.95 in pre-market trading following Donald Trump's victory. Cloud Peak Energy Inc. (NYSE: CLD) rose 12.3 percent to $7.40 in pre-market trading after gaining 0.30 percent on Tuesday. Ariad Pharmaceuticals, Inc. (NASDAQ: ARIA) rose 11.7 percent to $10.35 in pre-market trading. Ariad Pharmaceuticals disclosed that its Phase 1/2 trial data on investigational drug brigatinib were published in The Lancet Oncology. AK Steel Holding Corporation (NYSE: AKS) rose 11.2 percent to $6.75 in pre-market trading after gaining 3.23 percent on Tuesday. Pretium Resources Inc (NYSE: PVG) rose 11 percent to $10.50 in pre-market trading after declining 1.66 percent on Tuesday. First Majestic Silver Corp (NYSE: AG) rose 9.3 percent to $8.90 in the pre-market trading session. First Majestic reported Q3 earnings of $0.07 per share on revenue of $79.3 million. Silver futures gained 2.2 percent to $18.77 an ounce. Dicerna Pharmaceuticals Inc (NASDAQ: DRNA) rose 9.2 percent to
• [By Ben Levisohn]

  Shares of Corrections Corp of America (CXW) and GEO Group (GEO) have lost half their value after reports that the Justice Department plans to end the use of private prisons. The Washington Post’s Matt Zapotosky has the details:

  Bryan Anselm for The Wall Street Journal

  The Justice Department plans to end its use of private prisons after officials concluded the facilities are both less safe and less effective at providing correctional services than those run by the government.

  Deputy Attorney General Sally Yates announced the decision on Thursday in a memo that instructs officials to either decline to renew the contracts for private prison operators when they expire or ��substantially reduce�� the contracts�� scope. The goal, Yates wrote, is ��reducing �� and ultimately ending �� our use of privately operated prisons.��

  It’s not as if these stocks weren’t without their problems before their announcement. In a report released on Aug. 14, Canccord’s Ryan Meliker and Michael Kodesch discussed the headwinds facing Corrections Corp of America and GEO Group:

  The prison sector has faced headwinds as of late, as BOP reductions, family detention dynamics, and general sentencing reform dialogue have weighed on the two prison REIT names. We continue to believe the sector offers a unique blend of stable fundamentals and the potential for accretive external growth, though we also acknowledge CXW’s current risk associated with the renegotiation of a material contract, which we believe to be one-off in nature. Additionally, it is our view that while headline risk is a concern from a stock performance perspective, these are unwarranted concerns from an operating perspective. We continue to prefer GEO shares to those of CXW, driven by GEO’s lower risk to family detention, higher and safer dividend yield (8.0% vs. CXW’s 7.9%) and
  diversified business model.

  But it sure looks like their probl

• [By Ben Levisohn]

  Yesterday, Corrections Corp of America (CXW) and GEO Group (GEO) lost more than a third of their values after the Department of Justice said it would seek to wind down the use of private prisons. SunTrust Robinson Humphrey’s Tobey Sommer and Kwan Kim call the selloff “overdone.” They explain why:

  Todd Meier for the Wall Street Journal

  If the Bureau of Prisons (BOP) in-sources its business over time, that could represent 10%-12% of EBITDA at CXW and 13%-15% of EBITDA at GEO. Our sense is that the BOP will evaluate each facility at the time of its contract renewal date, taking into account the quality of each facility and the agency��s overall needs. This means the business is unlikely to be turned off overnight, but rather potentially be at risk over 5 years.

  Currently, we believe the BOP��s total inmate population to be 193,000, with 157,000 in their own facilities. Occupancy in BOP facilities is 117% vs. 140% several years ago. In-sourcing by increasing overcrowding in BOP facilities is an economically viable choice, but not one consistent with a desire to deliver superior quality to those inmates, in our view.

  The BOP canceled the CAR 16 procurement for 10,800 beds in the Southwest and is set to issue a substitute procurement for just 3,600 beds only in Texas. Of the three facilities operated by private firms in TX, we believe GEO��s Big Spring facility (3,600 beds) is the highest-rated facility.

  Paradoxically, we believe the BOP may also renewing contracts for certain facilities. We believe that the Department of Justice surprised the corrections space with its announcement.

  As far as ICE and U.S. Marshals businesses are concerned, we see them as more secure from in-sourcing risk since neither agency maintains its own network of facilities. Other risks exist, such as the family detention business in the news recently, but the risk of in-sourcing is relatively low, in our view.

  Sommer and Kim h

• [By Jon C. Ogg]

  Corrections Corporation of America (NYSE: CXW) was trading up 7.8% at $20.97 shortly before Monday’s closing bell. GEO Group Inc. (NYSE: GEO) was up 2.2% at $31.29.

• [By Ben Levisohn]

  Canaccord Genuity’s Ryan Meliker and Michael Kodesch call the selloff in Corrections Corp of America (CXW) and GEO Group (GEO) “overdone.” They explain why: