I won’t proclaim to have called the bottom when I told you last month that stocks would rise in January. What I knew is that, amid all of the chaos, one thing was abundantly clear at the time: Corporate revenue and profits were still on the rise and, thus, stocks had become too cheap to avoid.
Investors have now come to this same conclusion as the stock market closed higher Friday, extending its winning streak to a fourth straight session. Thanks to the bevy of positive earnings releases from the likes of Netflix (NFLX), Alcoa (AA), Goldman Sachs (GS), among others, the buying appetite for stocks have been seemingly been re-ignited.
The Dow Jones Industrial Average, which has risen 5.91% year to date, climbed 336.25 points Friday, or 1.4%, to close 24,706.35. The S&P 500 index (up 6.54% year to date) added 34.75 points Friday, or 1.3%, to end the session at 2,670.71, while the tech-heavy Nasdaq (up 7.87% year to date) added 72.76 points, or 1%, to close at 7,157.23. For the week, the Dow gained of 3%, while the S&P 500 and Nasdaq added respective increases of 2.9% and 2.7%.
The real winners are the investors who last month bought each dip and ignored the fears. With reports suggesting more progress is being made in terms of trade talks between the U.S. and China, it’s likely we haven’t seen the end of this rally, despite the possibility of a prolonged government shutdown. With more companies due to report better-than-expected results, the buying should continue. Here are the names to keep an eye on.
IBM (IBM) - Reports after the close, Tuesday, Jan. 22
Wall Street expects IBM to earn $4.84 per share on revenue of $21.75 billion. This compares to the year-ago quarter when earning were $5.14 per share on $22.54 billion in revenue.
What to Watch: The blue chip company is attempting to transform itself for the new age, but it continues to attract doubters. IBM’s success, particularly in the areas of technology services, cloud-platform and cognitive-solutions (includes IBM’s Watson AI) will determine its future. The main question heading into the quarter is, to what extent have these newer businesses grown to offset the decline in its legacy operations? The company’s $34 billion in cash deal to acquire cloud-computing company Red Hat (RHT) should strengthen IBM’s competitive positioning. Executing the deal is another matter.
Comcast (CMCSA) - Reports before the open, Wednesday, Jan. 23
Wall Street expects Comcast to earn 62 cents per share on revenue of $27.57 billion. This compares to the year-ago quarter when earning were 49 cents per share on $21.91 billion in revenue.
What to Watch: The hottest topic surrounding Comcast’s earnings will be what the company plans to do with Sky — the U.K.-based media company. Comcast won Sky in — what can only be described as — a bruising takeover battle with Disney (DIS) and 21st Century Fox (FOX). After Comcast shares lost 15% of their value in 2018, Wall Street is eager to hear what the management plans to do with its prize assets and how the investment can help reverse or offset waning satellite/cable TV business.
Ford Motor (F) - Reports after the close, Wednesday, Jan. 23
Wall Street expects Ford to earn 32 cents per share on revenue of $37.01 billion. This compares to the year-ago quarter when earning were 39 cents per share on $38.5 billion in revenue.
What to Watch: “Taking the good with the bad” has been the investment mantra among those who support Ford stock. One the one hand, the company is witnessing robust demand for its trucks and SUVs, owing to customers’ shifting focus toward spacious and comfortable vehicles. The F-Series trucks, Ford Expedition and Lincoln Navigator continue to be top sellers in their category. On the other hand, amid all of Ford’s record vehicle sales, the company’s profits continue to shrink. High operating costs and metals tariffs on China continue to hurt the bottom line. So, beyond the appeal of the cheap stock price, where’s the value in Ford? That’s what management must answer.
Starbucks (SBUX) - Reports after the close, Thursday, Jan. 24
Wall Street expects Starbucks to earn 65 cents per share on revenue of $6.49 billion. This compares to the year-ago quarter when earnings were 65 cents per share on revenue of $6.07 billion.
What to Watch: Concerns about that Starbucks has saturated its market have begun to fizzle in recent months. The company stunned Wall Street in the fourth quarter by demonstrating strong growth re-acceleration across key parts of the business. Not only did the premium coffee chain top analysts forecast for Q4 revenue and earnings, the company crushed its expectations in both same-store sales and active rewards members. On Thursday investors will be eager to learn whether results of Q4 was an aberration or a sign of better things to come in fiscal 2019.
Intel (INTC) - Reports after the close, Thursday, Jan. 24
Wall Street expects Intel to earn $1.22 per share on revenue of $19.01 billion. This compares to the year-ago quarter when earnings were $1.08 per share on revenue of $17.05 billion.
What to Watch: Intel, which last year relinquished its longstanding title as the world's largest chipmaker by revenue to Samsung, has seen a rebound of late, thanks to the company’s strong diversification into businesses beyond the realm of the PCs and servers. The company’s Mobileye and Internet of Things (IoT) units, which boosted Q3 revenues 20%, have given investors reasons to be optimistic about the company’s future. This is despite the fact that Intel is still operating with an interim CEO. And that latter point is likely to be a focus on the conference call as analysts will want to know when that uncertainty (installing a permanent CEO) will be addressed.