U.S. stocks closed out their best week of the year with gains on Friday, as the Dow and S&P 500 hit new records following Donald Trump's decisive election victory.
Investors are counting on the Trump administration to bring about deregulation and tax cuts that could boost the U.S. economy.
For the week, the blue-chip Dow Jones Industrial Average rose 4.6%, the benchmark S&P 500 rose 4.7% and the tech-heavy Nasdaq Composite Index rose 5.7%.
Source: Investing.com
The coming week is expected to be eventful as investors assess the outlook for the economy, inflation, interest rates and corporate earnings.
Most important on the economic calendar is the October U.S. Consumer Price Inflation Report, due out on Wednesday, with the annual headline CPI expected to rise 2.4% from a year ago.
Other notable economic reports include U.S. retail sales data and reports on producer prices, which can help you understand the inflation picture.
Source: Investing.com
As a result, a number of Fed speakers are scheduled to appear on Thursday, including Chairman Jerome Powell.
Earnings season continues in other regions, with Walt Disney (NYSE:DIS), Home Depot (NYSE:HD), Cisco (NASDAQ:CSCO), Applied Materials (NASDAQ:AMAT), and Shopify (NYSE :SHOP), Spotify (NYSE:SPOT), and Alibaba (NYSE:BABA).
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, please note that my period is only for one week, from Monday, November 11th to Friday, November 15th.
Shopify stands out as this week's top buy. The e-commerce software leader is expected to deliver strong sales growth in the coming quarters as well, offering a positive outlook, as it has posted solid growth across key metrics.
Shopify's report is scheduled to be released Tuesday at 7 a.m. ET. Market participants expect SHOP stock to move significantly after the print decline, with an expected move of about 14% in either direction, according to the options market. The stock has increased 26% since its last earnings release in August.
Source: InvestingPro
Analysts have raised their earnings estimates 33 times in recent weeks, underscoring confidence in Shopify's continued expansion, according to InvestingPro research.
Wall Street said adjusted EPS rose 14% to $0.27 and revenue rose 23% to more than $2.1 billion, driven by positive merchant growth and consistent demand for Shopify's suite of software and payment tools. I predict that it will.
Additionally, Shopify has proven to have seasonal advantages. The company's stock tends to gain momentum heading into Black Friday and Cyber Monday (NASDAQ:MNDY) (BFCM). Historically, stocks have risen about 7% in the two weeks before BFCM from 2016 to 2023, demonstrating resilience amid a surge in demand leading up to the holiday season.
Shopify continues to be well-positioned for upside as more merchants turn to e-commerce for the holiday rush.
SHOP stock closed Friday at $87.12, its highest closing price since February 12th. The stock has increased 11.8% since the beginning of the year. At current levels, the Ottawa, Canada-based e-commerce specialist has a market capitalization of $112.5 billion.
Source: Investing.com
As noted by InvestingPro, Shopify has a near-perfect 4.0 out of 5.0 thanks to its favorable position in the software applications industry, which has allowed it to take advantage of its resilient business model and strong profit growth. We have a “financial soundness” score.
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In contrast, Occidental Petroleum (NYSE:OXY) faces a more bleak outlook, with unpredictable energy markets and oil price fluctuations making it a strong sell this week.
The company is scheduled to release its third-quarter earnings report after the market closes at 4:15 p.m. ET on Tuesday. Traders are pricing OXY stock to move about 6% in either direction after the news, according to options markets.
The current uncertainty in the energy sector has made Occidental's path to growth more complex, as the company navigates a complex landscape surrounding global demand and strategic shifts within the industry.
Source: InvestingPro
Reflecting the challenging market, 16 out of 17 analysts have revised their EPS estimates downward in recent weeks, dimming the outlook for oil and gas producers.
Earnings are expected to decline 36.4% from the previous year to $0.75 per share, and sales are expected to decline 4% for the full year to $7.1 billion. The decline comes amid ongoing debate over oil price fluctuations and the outlook for global energy demand.
Occidental has made moves to strengthen its position in the sector, including recent strategic initiatives, but short-term pressures continue to weigh on the stock. As a result, the risk of underperformance appears higher as the company grapples with broader market uncertainty and industry-specific hurdles.
OXY stock closed Friday at $50.53, not far from its recent 52-week low of $49.51, set on November 1st. The stock price will fall by 15.4% in 2024. At its current valuation, the Houston, Texas-based company has a market capitalization of $47 billion.
Source: Investing.com
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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.
