Author: Don Obrien

Economic Indicators Coming: Investing Action Plan

Here’s your Investing Action Plan: what you need to know as an investor for the coming week. Look for pivotal comments and economic indicators on the economy’s health both on the jobs front and from the Fed. Additionally, a flurry of corporate earnings reports from energy and gaming industries are due.


New Energy Plays Power Up Buy Points

A number of EV-related and other alternative-energy plays are in or near buy zones. China EV makers Xpeng (XPEV) and Li Auto (LI) are near buy points with October sales figures coming as soon as Monday. Lithium plays Albemarle (ALB) and Livent (LTHM) are right around buy points with earnings on tap this coming week. Fuel-cell leader Plug Power (PLUG) has broken out from a bottoming base as it moved past its 200-day line.

Jobs Report Coming

The October jobs report, out Friday at 8:30 a.m. ET, will answer one big question. Are workers who were sidelined during the pandemic — due to some combination of health worries, child care issues and generous government benefits — finally ready to go back to work? Although pandemic jobless benefits ended before Labor Day, September’s jobs report showed a decline in labor force participation — the ranks of those working or looking for a job. As a result, employers are in a bidding war for labor. They are paying higher wages and stretching their workforces via a longer workweek. That contributes to inflationary pressures. The labor market shouldn’t be tight. Total employment is still down 5 million since February 2020, even amid population growth. Wall Street is betting that those sidelined workers are now beginning to stream back into the job market. That is boosting job gains, feeding economic growth and helping those inflationary pressures subside.

Health Of Manufacturing Update

On tap in the coming week, the Institute for Supply Management releases its monthly manufacturing survey index for October on Monday at 10 a.m. ET. The ISM index edged above 60 last month, far above the neutral 50 level. But the biggest contributors to the increase were higher prices and slower supplier deliveries. In other words, supply-chain issues that are slowing growth and contributing to inflation showed no sign of letting up. The key question: Will November’s ISM report signal some relief?

Fed Seen Following Plans

The coming week’s Federal Reserve meeting will wrap up with a policy statement Wednesday at 2 p.m. ET. That will usher in the beginning of the end of crisis-driven asset purchases. But the long-awaited taper announcement has been so well telegraphed that this Fed meeting will be one of the least suspenseful in a while.

On Sept. 22, Fed chief Jerome Powell revealed policymakers’ consensus to wind up asset purchases by the middle of next year. That’s a bit sooner than expected. Subsequently, minutes from the Fed’s Sept. 21-22 meeting spelled out the details. Starting mid-November, or possibly mid-December, the $80 billion in monthly Treasury purchases and $40 billion in monthly buys of government-backed mortgage securities will ratchet down by $10 billion and $5 billion per month, respectively. Only after asset purchases end in mid-2022 will rate hikes potentially be on the table. As long as Powell, in his post-meeting news conference, remains confident that inflation will be on the wane by then, investors should remain upbeat.

Solar Companies To Report

Several solar energy companies report earnings this week. This follows the earnings report of Enphase Energy (ENPH) last week, which beat estimates, as did the outlook. That caused a breakout in solar energy stocks. SolarEdge (SEDG) reports late Tuesday. SunPower (SPWR) reports late Wednesday, then First Solar (FSLR) late Thursday. The IBD Energy/Solar industry group has leapfrogged to the No. 15 position, from 165 just three weeks ago, among the 197 industry groups.

Airbnb, Hotels Check In

Airbnb (ABNB) reports Q3 results Thursday. The consensus looks for earnings of 75 cents a share, double that of a year ago, on revenue of $2 billion, up 54%. Marriott (MAR) reports Wednesday.

Casinos, DraftKings To Report Q3 Earnings

MGM Resorts (MGM) will report earnings Wednesday. FactSet analysts expected it to trim losses by 96% from the year-ago period to 4 cents a share. They see sales popping 117% to $2.44 billion, as customers return to casinos amid lifted Covid-19 travel and capacity restrictions. Caesars Entertainment (CZR) reports Tuesday. Wall Street sees EPS of 16 cents, swinging from a $6.09 loss a year ago. Analysts expect revenue will swell 93% to $2.66 billion. Penn National Gaming (PENN) reports Thursday. EPS is likely to drop 20% to 64 cents. However, sales are set to gain 34% to $1.51 billion. Sports-betting giant DraftKings (DKNG) is on tap early Friday. Analysts expect it will post an 87-cents-a-share loss for the quarter, a 53% decline year over year. Yet sales are projected to surge 78% to $236.4 million.

Key Security Software Data Points

Cybersecurity firm Fortinet (FTNT) reports Q3 earnings Thursday. Analysts estimate EPS of 94 cents, up 7% from a year earlier. Revenue will climb 24% to $810 million, analysts estimate. Fortinet stock has more than doubled this year. Mimecast (MIME) reports fiscal Q2 earnings Tuesday. Analysts expect the cybersecurity firm to report EPS of 33 cents, up a penny from a year earlier. Revenue will rise 16% to $143 million, analysts estimate.

Fertilizer Companies Report

Fertilizer makers Mosaic (MOS), Nutrien (NTR) and Intrepid Potash (IPI) report Q3 results on Monday, while CF Industries (CF) reports on Wednesday. The companies report as fertilizer prices soar, amid disruptions from U.S. storms and rising natural gas prices. Mosaic’s EPS is seen up 570% to $1.54, on sales up 54% to $3.67 billion. For Nutrien, EPS is set to jump 420% to $1.25, with sales up 34% to $5.6 billion. Intrepid Potash was seen earning 58 cents per share, up from a loss last year, with sales up 33% to $50.8 million. CF Industries was also seen swinging to a profit of 97 cents per share, with revenue up 63% to $1.38 billion.

Etsy Spins Up Q3

Etsy (ETSY) reports Q3 results Wednesday, coming at a time the stock has pulled back from record highs. The consensus looks for adjusted earnings to fall 26% to 69 cents a share. Revenue is expected to climb 15% to $518.8 million. Argentina-based e-commerce giant MercadoLibre (MELI) reports late Thursday. The consensus looks for earnings of $1.29 a share, soaring above year-ago EPS of 28 cents. The outlook on revenue is $1.86 billion, up 70%.

Energy Data Points Coming

OPEC+ will meet Thursday to review its production quotas. The group, made up of Organization of the Petroleum Exporting Countries and top nonmembers like Russia, has been meeting monthly to help gauge demand growth. Diamondback Energy (FANG) and Continental Resources (CLR) will report Q3 results Monday. Devon Energy (DVN) will report Tuesday, EOG Resources (EOG) Thursday and Occidental Petroleum (OXY) Friday.

China EV Sales Updates

Chinese EV startups Nio (NIO), Li Auto (LI) and Xpeng (XPEV) tee up to report EV sales for October. In Q3, Nio’s EV sales doubled, year over year, while Li Auto’s and Xpeng’s sales almost tripled. Thanks in large part to Tesla (TSLA), overall China EV sales also nearly tripled last quarter. China’s homegrown EV and battery giant BYD (BYDDF), making a big shift to EVs and backed by Warren Buffett, is also set to disclose October sales. On Thursday, BYD said net profit 27% plunged in Q3 despite rising vehicle sales. Q3 sales of its new electric vehicles, which include hybrids, leapt 294% year over year. Its startup peers will report Q3 earnings around mid-November.

Lithium Plays Heat Up

Two hot lithium plays report Q3 earnings in the coming week. For Albemarle (ALB), which reports Wednesday, EPS is seen falling 31% from a year ago to 75 cents, according to Zacks Investment Research. Revenue is expected to grow 4% to $775.61 million. Livent (LTHM) is expected to turn a profit of 4 cents per share, rebounding from a year-ago loss, as revenue grows 33% to $96.66 million. Lithium prices have been soaring as automakers race to build EV battery factories, raising the risk of a lithium shortage in coming years. Yet Albemarle and Livent are locked into longer-term contracts, so it may take a while for higher prices to flow through to the bottom line.

Video Game Stocks Seek Reset

Three top video game publishers are due to report Q3 results in the week ahead. Activision Blizzard (ATVI) will report results Tuesday. Electronic Arts (EA) and Take-Two Interactive Software (TTWO) plan to report Wednesday. The video game sector has been beaten down this year amid concerns about slowing sales growth after last year’s big boost from stay-at-home orders during the pandemic. IBD’s gaming software group ranks No. 166 out of 197 industry groups.

In Brief:

  • Exp World (EXPI), a cloud-based real-estate brokerage, reports Q3 earnings on Wednesday. Wall Street expects earnings per share of 14 cents, up 40%, as revenue jumps 77% to $999 million.
  • Digital Turbine (APPS) late Tuesday, is expected to report adjusted profit of 39 cents per share on $307 million in sales for its fiscal Q2. Earnings would surge 160% and sales would rocket 332%.
  • Freshworks (FRSH) will report its first quarterly results as a public company late Tuesday. The consensus for the customer service software maker is a loss of 1 cent on revenue of $90.8 million, up 37%.
  • Big 5 Sporting Goods (BGFV) late Tuesday is likely to post a 14% EPS drop to $1.13 despite a 3% revenue increase to $314.6 million.
  • Under Armour (UAA) will report Q3 results before the market opens Tuesday. Analysts see the athletic wear company reporting a 41% drop in earnings to 15 cents per share. Sales are seen rising 4.3% to $1.48 billion.
  • Monster Beverage (MNST), an energy-drink maker, reports Q3 earnings on Thursday. Wall Street expects Monster to earn 67 cents per share, up 3%, on sales up 12% to $1.4 billion.
  • Wingstop (WING), a chicken-wing chain, reports Q3 earnings on Wednesday. Analysts expect EPS of 35 cents, up 3%, as revenue increases 17% to $74.9 million.
  • Charles River Laboratories (CRL) is expected Wednesday to report adjusted income of $2.58 per share and $907 million in Q3 sales. Earnings would rise close to 11% and sales would increase roughly 22%.
  • Floor & Decor (FND), a flooring retailer, reports Q3 earnings on Thursday. Wall Street expects the company to earn 56 cents per share, unchanged from a year ago, as revenue climbs 25% to $857 million.
  • Uber (UBER) reports Q3 results Thursday. It’s expected to trim losses to 16 cents a share, vs. a year-ago loss of 44 cents, on sales of $4.41 billion, a 41% gain over last year. Lyft (LYFT) reports Tuesday. It’s seen posting a 3-cents-a-share loss, vs. an 89-cent loss a year ago. Sales are expected to jump 72% year over year to $862.4 million.
  • IAC/InterActiveCorp (IAC) reports earnings on Thursday. IAC is expected to swing to an adjusted 34-cent loss from a $2.63 EPS a year earlier. Revenue will rise 7% to $840 million, analysts estimate.
  • Roku (ROKU) will report Q3 earnings late Wednesday. Analysts expect Roku to earn 6 cents a share, down 33%, on sales of $683.8 million, up 51%. Roku is seen adding 1.6 million new accounts in Q3.


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Oliver Bolt

Oliver Bolt

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