Stock Market Investing Action Plan: Disney, A Nasdaq Power Trend And More Powell; Nasdaq’s Best January in 22 Years

January provided a hospitable start to 2023, giving investors a reminder of what upward stock market momentum feels like. Friday’s jobs report rattled hopes for a dovish Fed, and Jerome Powell may further that message on Tuesday. Disney’s report on Wednesday leaves the Dow with just a handful of reports left for Q4. And the impact of final Eurozone restrictions on Russian energy products could give flailing oil and gas stocks another good stir.




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Stocks To Watch: A Diverse Group Of Leaders

With the market rally showing further strength, investors should be looking for stocks flashing buy signals. Boeing (BA), Qualcomm (QCOM), Delta Air Lines (DAL), Exxon Mobil (XOM) and Autoliv (ALV) are all hovering near buy points. Boeing is near a 216.74 handle buy point in a long consolidation. Qualcomm is finding support at its 200-day line after mixed earnings and may form a handle in a long base. Delta is right around a 39.72 handle buy point. Exxon has held support at its 50-day line, below a 114.76 entry. Autoliv gapped up past an 89.98 buy point. All have earnings out of the way as well. Most of these stocks are in leading groups, though energy names have faltered in the past week or so.

Econ Calendar: Massaging Powell’s Message

Federal Reserve Chair Jerome Powell will participate in a discussion at the Economic Club of Washington on Tuesday at 12:40 p.m. ET. Powell’s upbeat news conference after the Fed’s rate hike last Wednesday sparked the S&P 500 to a five-month high. Investor spirits were lifted by Powell’s talk of disinflation and a soft landing, and appeared to open the door to lower rates in 2023 if trends continue. But after a surprisingly strong January jobs report, Powell will have a chance to sound more hawkish.


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Market Perspective: Best January In 22 Years

The trading year got off to a positive, if uneven, start in January. The Dow Jones Industrial Average added 2.8% for the month. The S&P 500 turned in a 6.2% advance. The Nasdaq composite rallied 10.7% — its best January since a 12.2% rally amid the market’s meltdown in 2001. Small caps didn’t sit out the party. The Russell 2000 shot ahead  9.7% and the S&P Small Cap 600 notched a 9.4% gain. The Dow ducked into the first several days of February with a modest decline. The Russell and S&P 600 rose about 3% apiece. Meanwhile, the Nasdaq jumped nearly 5%, as its newfound “power trend” gained traction. EV maker Lucid (LCID) was the Nasdaq’s fastest mover in January, spiking 71%. 

Blue Chip Earnings: Disney Gears Up For A Battle

Disney earnings: Dow giant Walt Disney (DIS) reports its first quarter earnings results Wednesday afternoon. Analysts expect earnings to drop for the second quarter in a row, falling 27.5% to 79 cents per share. Revenue growth is seen slowing for the second consecutive quarter, increasing 7.4% to $23.4 billion. Meanwhile, Disney is readying for a proxy battle against activist investor Nelson Peltz, founder of Trian Fund Management, who has a $900 million stake and wants a board seat. On Jan. 11, Disney appointed former Nike (NKE) CEO Mark Parker to serve as the new board chair, replacing Susan Arnold at the next annual shareholder meeting.

Industry Trends: January shows leadership shift

Industries leading the biggest gains in the three months through January included metal products distributors, apparel and shoe makers, steel producers and leisure travel booking. However, the biggest gains in January tell a different tale: automakers rallied more than 30%, educational software makers surged 29% steel producers leapt 26%, while internet retailers soared 24% and ore miners notched a better-than 21% gain.

 S&P 500 Earnings Tracker: Domestic Q4 Shows Strength

Companies with more overseas exposure had a harder time in the fourth quarter. Those generating more than 50% of sales outside the U.S., combined with the Q4 forecasts of those that have not yet reported, show a 7.4% decline in earnings. Earnings for companies with a higher share of domestic exposure are down 2.5%. Overall earnings for the S&P 500, through Thursday’s closing bell, were down 4.5%.


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On the revenue side, overall growth for S&P 500 companies was 4.2%. Companies with a U.S. focus are so far reporting and targeting a collective 5% increase in revenue. Those with a larger share of revenue coming from outside the U.S. show a 2.2% gain. Excluding Intel, Alphabet, Meta Platforms and Apple alters the earnings picture for companies with an international focus to a 1.9% gain, vs. a 7.4% decline.   

Energy Markets: A Russian Diesel Scramble

Global energy markets will be on notice next week, as the European Union expands its embargoes on Russian energy goods to include diesel and gasoline. The embargoes are an attempt to hurt the revenue sources funding Russia’s war. But the EU’s trucks and more than 40% of its cars run on the 700,000 barrels per day of diesel supplied by Russia. How global markets will respond is unclear, although a large share of Russia’s exports may simply reroute to China and India. In the U.S., diesel prices are 20% off their June high, and up 24% from a year ago.


 Stock Market Earnings


Monday

Activision Blizzard (ATVI) and Take-Two Interactive Software (TTWO) will report their December-quarter results late Monday. The video game publishers follow industry peer Electronic Arts (EA), which saw its shares tumble after it missed its holiday-quarter targets and guided lower for the current quarter.


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Onsemi (ON), Power Integrations (POWI) and Skyworks Solutions (SWKS) will report earnings for the December quarter on Monday. The chipmakers will post their results and give guidance amid a wave of semiconductor firms lowering estimates for March quarter amid high channel inventories in certain markets.

Cummins (CMI) announces fourth-quarter financials before the market opens. Wall Street expects EPS to grow 58% to $4.52 with sales expected to increase 24% to $7.29 billion. Cummins has averaged 6% EPS growth over the last three quarters while revenue has increased 11% on average.

Tuesday

BP (BP) releases fourth-quarter earnings early Tuesday. Analysts forecast earnings growing 35% to $1.66 per share while revenue will increase 6% to $55.39 billion. The oil and gas multinational has averaged 173% EPS growth and 50% sales increase in recent quarters.

Illumina (ILMN) is on deck to report its fourth-quarter earnings late Tuesday. Analysts expect Illumina’s sales to fall more than 10% to $1.07 billion. Adjusted profit is projected to come in at 34 cents per share, down 55%.

Paycom Software (PAYC) reports Q4 earnings after the market close on Feb. 7. Analysts project EPS of $1.48, up 33% from a year earlier. Revenue is expected to rise 28% to $367.1 million.

Car rental company Hertz (HTZ) reports its Q4 results early Tuesday. Adjusted earnings are expected to fall for the third quarter in a row, dropping 47% to 48 cents per share. Revenue is seen climbing 5% to $2.05 billion, which would mark six quarters of decelerating sales growth.

Vertex Pharmaceuticals (VRTX) is on deck to report its fourth-quarter earnings before the stock market opens Tuesday. Analysts call for adjusted profit of $3.53 per share and $2.3 billion in sales, up 5% and 11% year over year, respectively.

Chipotle Mexican Grill (CMG) announces its fourth quarter earnings results Tuesday afternoon. Analysts expect the fast food chain’s earnings to accelerate for the third quarter in a row, spiking 59.7% to $8.91 per share. Revenue growth is expected to slow for the fourth consecutive period, as sales rise 13.8% to $2.23 billion. CMG stock is trading in the buy zone of a double bottom base.

Nabors Industries (NBR) reports fourth-quarter earnings late Tuesday. Wall Street forecasts a loss of $1.10 per share for the provider of oil and gas drilling gear and services, a better result than the $14.60 a share loss a year ago. Analysts expect revenue to increase 37% to $744 million. Nabors Industries hasn’t reported a profit since 2014, but analysts expect that to change in 2023.

Wednesday

CVS Health (CVS) reports Q4 earnings before Wednesday’s open. Analysts expect EPS to slip 3% to $1.92 as revenue dips 0.5% to $76.2 billion. The fading of the Covid crisis has been lousy for CVS stock, which is near a 15-month low.

Molina Healthcare (MOH) reports Q4 results after Wednesday’s close. EPS is seen rising 40% to $4.02 on revenue growth of 6% to $7.87 billion. Molina surged on Medicaid contract wins last fall but is now lagging near 6-month lows.

Analysts expect Under Armor (UAA) to report its third earnings decline in a row for its Q3 results Wednesday morning. Adjusted earnings are seen tumbling nearly 71% to 9 cents per share while revenue edges up 0.2% to $1.549 billion.

Teva Pharmaceutical (TEVA) will report fourth-quarter earnings before the stock market opens Wednesday. Wall Street projects adjusted earnings of 71 cents a share on $3.89 billion in sales, down a respective 7.8% and 5.2%.

MGM Resorts International (MGM) reports Q4 results late Wednesday. Owner of Macau, China-based MGM China, the company last year saw 12.5% of its overall revenue from the gaming hub. Analysts target a loss of $1.45 a share, according to FactSet, down from a 12-cent gain a year ago. Sales are seen rising 9.6%, which would mark a sixth quarter of slowing revenue growth.

Thursday

AbbVie (ABBV) is expected early Thursday to report $15.33 billion in fourth-quarter sales, up 3%. Analysts also predict adjusted profit of $3.53 a share, growing 6.6%.

PayPal Holdings (PYPL) reports Q4 earnings late Feb. 9. Analysts project EPS of $1.20, up 7% from a year earlier. Revenue is expected to climb nearly 7% to $7.39 billion. PayPal plans to cut 2,000 jobs, about 7% of its workforce.

Cybersecurity firm CyberArk Software (CYBR) reports Q4 earnings early Feb. 9. Analysts project EPS of 13 cents, down 53% from a year earlier. Revenue is expected to climb 15% to $174.2 million.

Beverage giant PepsiCo (PEP) releases Q4 results Thursday morning. Adjusted earnings are seen rising 7.8% to $1.65 per share, with income slowing after three quarters of accelerating gains. Revenue is expected to grow 6.3% to $2.68 billion, and Pepsi averaged 7.67% sales growth for the past three quarters.

ArcelorMittal (MT), part of the red-hot steel stock group, reports Q4 results on Thursday morning. Earnings are seen crashing 91% to 36 cents per share, with sales down 31% to $14.35 billion. But analysts think earnings may be near a trough as the global outlook improves.

Hospitality and hotel chain Hilton Worldwide (HLT) announces fourth quarter results Thursday morning. Adjusted earnings are seen accelerating 70.8% to $1.23 per share after two quarters of slowing growth. Revenue growth is expected to decelerate for the fourth quarter in a row, rising 27.8% to $2.346 billion. HLT stock is trading in the buy zone for a cup base.

Willis Towers Watson (WTW), a U.K.-based insurer, is pulled back neatly to a test of 10-week support ahead of its Q4 report early Thursday. Analysts forecast revenue down for a fourth straight quarter, but with declines slowing to a fraction.

O’Reilly Automotive (ORLY) delivers its fourth-quarter results late Thursday. Analysts see a 1.4% earnings gain and a 6.5% advance in revenue. Both are slightly below average growth in recent quarters. Outlook will be crucial as the auto market undergoes intense challenges in supply and inflationary pressure.  

Friday

Enbridge (ENB) reports fourth-quarter earnings early Friday. Analysts expect earnings to remain flat year over year, coming in at 54 cents per share. Revenue is forecast to edge up 4% to $10 billion. The company’s expected EPS growth rate is in line with the last three quarters while its sales increase is below an average 12% increase in recent quarters.

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Source: https://www.investors.com/research/investing-action-plan/stock-market-investing-action-plan-nasdaq-best-january-in-22-years/?src=A00220&yptr=yahoo