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This week will focus on retail sales, Fed speakers, and third-quarter results.
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Netflix is a buy because its profits are on the rise and its subscriber numbers are expected to increase.
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Walgreens Boots Alliance is a sell with disappointing earnings and outlook.
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U.S. stocks rose on Friday, capping a five-week winning streak as investors digested the first round of third-quarter earnings and continued to assess the Federal Reserve's interest rate plans for the coming months. .
For the week, the benchmark S&P 500 and blue-chip Dow Jones Industrial Average rose 1.1% and 1.2%, respectively. Both averages were new highs and new records. The Nasdaq Composite, which is heavy on tech stocks, rose 1.1%.
Source: Investing.com
The week ahead is expected to be another busy one as investors assess the outlook for the economy, interest rates and corporate earnings, with the holiday shortened and U.S. stock markets closed on Monday for Columbus Day.
The most important part of the economic calendar is Thursday's September U.S. retail sales report, with economists expecting a headline 0.3% increase in sales, following a 0.1% increase the previous month.
Source: Investing.com
It will include public appearances by a number of Fed speakers, including District Governor Neil Kashkari, Christopher Waller, Mary Daly and Adrianna Kugler.
As of Sunday morning, investors believed there was an 86% chance the Fed would cut interest rates by 25 basis points at its Nov. 7 policy meeting, and a 14% chance it would do nothing, according to Investing.com's Fed Monitor tool. I'm looking at it.
Meanwhile, third-quarter earnings season is in full swing, with Netflix (NASDAQ:NFLX) leading the way. Other well-known companies reported include Bank of America (NYSE:BAC), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), American・Express (NYSE:AXP), Johnson & Johnson, etc. (NYSE:JNJ), UnitedHealth (NYSE:UNH), Procter & Gamble (NYSE:PG), Walgreens Boots Alliance (NASDAQ:WBA), United Airlines (NASDAQ:UAL), ASML (AS:ASML ), Taiwan Semiconductor (New York Stock Exchange:TSM).
Regardless of which direction the market goes, here are stocks that are likely to be in demand and that are poised for new downside. However, my time frame is: just For the next week, From Monday, October 14th to Friday, October 18th.
Stock to buy: Netflix
I expect another strong performance from Netflix stock this week, as the streaming giant's third-quarter earnings report is expected to easily beat expectations due to strong consumer demand trends and an improving fundamental outlook.
The Los Gatos, Calif.-based internet television network plans to release its third-quarter update after the U.S. market closes Thursday at 4 p.m. ET. A conference call with co-CEOs Ted Sarandos and Greg Peters is scheduled for 5 p.m. ET.
According to the options market, market participants expect NFLX stock to move significantly after the paper decline, with a 7.9% move in either direction expected.
Earnings estimates have been revised upward 29 times in the past 90 days, reflecting growing confidence among analysts. There were only two notable downward revisions, highlighting Wall Street's bullish sentiment toward Netflix.
The company's recent cost-cutting measures and ability to drive subscriber growth have established it as a dominant player in the streaming space.
Source: InvestingPro
Netflix appears to have earned $4.53 per share, up 37% from the year-ago quarter's EPS of $3.11. Meanwhile, sales are expected to increase 14.3% year-on-year to $9.76 billion.
If confirmed, this would be the highest quarterly revenue in Netflix's 27-year history, but this is due to strong demand for the lower-cost, ad-supported tier and more users signing up. This is driven by the company's continued crackdown on password sharing, which it has encouraged users to do. for your own account.
As such, I think Netflix will maintain a solid pace of online streaming subscriber growth, easily beating Wall Street's forecast for the company to add about 4.2 million new global subscribers during the third quarter. Masu.
NFLX stock hit a new all-time high of $736 on Friday and closed at $722.79. At current levels, Netflix has a market cap of $310.2 billion.
Source: Investing.com
The stock is up 48.4% since the beginning of the year.
InvestingPro highlights Netflix's promising outlook and highlights the company's favorable position in the streaming industry, which allows the company to take advantage of a resilient business model and strong profit growth.
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Sales inventory: Walgreens Boots Alliance
In contrast, Walgreens Boots Alliance plans to release a disappointing earnings report when it releases an update on its fiscal fourth quarter to investors before the market opens at 7 a.m. ET on Tuesday. is.
The retail pharmacy giant is struggling to weather a difficult macroeconomic environment, and the outlook for its stock price remains bleak.
Traders are pricing Walgreens stock to move about 7.5% in either direction on the news, according to options markets.
Earnings have been the catalyst for wide swings in stock prices this year, with WBA trailing by a wide 22.7% in late June, when the company last reported quarterly results, according to InvestingPro data.
Analysts are expecting a sharp decline in earnings, with the company expected to be down about 53% compared to their initial forecasts 90 days ago. This significant downward revision reflects a number of challenges facing Walgreens, including weak consumer demand, rising labor costs, and continued inflationary pressures.
Source: InvestingPro
Wall Street expects Walgreens to report earnings per share of $0.36, compared with year-ago earnings of $0.67, due to rising cost pressures and declining operating margins.
Meanwhile, sales are expected to increase 0.4% year-on-year to $35.55 billion, as the company deals with weak consumer spending due to a difficult retail environment.
Compounding its woes, Walgreens is expected to provide soft guidance next year as it struggles to adapt to the growing popularity of online pharmacies and direct-to-consumer platforms, which will is seen as a threat to Walgreens' business.
WBA stock closed Friday at $9.21, not far from its recent low of $8.22, its lowest since September 1996. At current valuations, the Deerfield, Illinois-based retail drugstore chain operator and pharmacy services provider has a market capitalization of $7.9 billion.
Source: Investing.com
The stock, which was removed from the Dow Jones Industrial Average earlier this year, will fall 64.7% in 2024.
Unsurprisingly, concerns about Walgreens' weak profitability outlook and high debt give the company a below-average InvestPro Financial Health score of 1.8 out of 5.0.
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Disclosure: As of this writing, I am long the S&P 500 and Nasdaq 100 through the SPDR® S&P 500 ETF and the Invesco QQQ Trust ETF. I'm also long the Technology Select Sector SPDR ETF (NYSE:XLK).
I regularly rebalance my portfolio of individual stocks and ETFs based on an ongoing risk assessment of both the macroeconomic environment and corporate finances.
The views expressed in this article are solely those of the author and should not be taken as investment advice.
X/Follow Jesse Cohen on Twitter @JesseCohen For more stock market analysis and insight.
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