Momentum has returned to the stock market, thanks to (among other things) strong earnings reports from the likes of Apple (AAPL), Facebook (FB) and General Electric (GE), which helped the S&P 500 index to log its best January performance in thirty-two years with a gain of 8%. I won’t say “I told you so,” but I had an inkling this would happen.
The positive earnings results from a handful of S&P 500 companies have seemingly helped investors forget about tariff-related rhetoric and any impact the government shutdown has had on the economy. U.S. stocks on Friday were also aided by solid jobs report data for January. The U.S. economy created 304,000 new jobs in January, well above the consensus estimate of 172,000. This affirmed what we’ve known for some time: It’s going to take a lot more than political posturing to get this train off track.
All told, equities closed the week on a strong note, lead by the tech-heavy Nasdaq Composite Index, which closed out the week 1.4% higher. The Dow Jones Industrial Average, meanwhile, added more gains Friday, extending its streak for a sixth week, marking its longest weekly winning stretch in almost two years. More positive earnings should continue to fuel the momentum in equities. Here are the stocks to keep an eye on.
Alphabet (GOOG , GOOGL) - Reports after the close, Monday, Feb. 4
Wall Street expects Alphabet to earn $10.86 per share on revenue of $38.98 billion. This compares to the year-ago quarter when earnings came to $9.70 per share on revenue of $32.32 billion.
What to watch: Past concerns about the company’s profit margins have been corrected amid stronger Traffic Acquisition Costs in the advertising business as well as other operational improvements. But among the company’s expanding services portfolio, Wall Street will take an interest in Google’s Cloud performance compared to leaders Amazon (AMZN) and Microsoft (MSFT). Elsewhere, the company’s improving search features and strategic partnerships are expected to drive top-line growth. The question is, to what extent can these metrics offset concerns about possible stricter government intervention in an effort to strengthen the security and privacy of consumers’ data?
Gilead Sciences (GILD) - Reports after the close, Monday, Feb. 4
Wall Street expects Gilead to earn $1.71 per share on revenue of $5.49 billion. This compares to the year-ago quarter when earnings came to $1.78 per share on revenue of $5.95 billion.
What to watch: With Gilead shares rising some 11% over the past thirty days, a solid beat on both the top and bottom lines would be just what the doctor ordered to keep the momentum going. Increased competition from the likes of Merck (MRK) and AbbVie (ABBV) have pressured Gilead’s HCV revenues, resulting in declining sales in several key products such as Harvoni and Sovaldi, which are used to cure liver diseases. On Monday investors will want the management to outline its strategy to better compete in the hepatitis C market and issue guidance that suggests the recent stock increase can be sustained.
Snap (SNAP) - Reports after the close, Tuesday, Feb. 5
Wall Street expects Snap to report a per-share loss of 8 cents on revenue of $375.82 million. This compares to the year-ago quarter when the loss came to 13 cents per share on revenue of $285.69 million.
What to watch: Is the worst finally over for Snap? Eric Ross, chief investment strategist at Cascend Securities, believes it has. In a research note Friday, Ross upgraded the stock from Sell to Hold, saying Snap’s fumbled app redesign for Android "have snapped back to positive.” On the report, Snap shares climbed as high as 7%, but couldn’t hold on the gains. The stock ended Friday 3.44% higher and is now up 25% year to date. On Tuesday analysts will nonetheless focus on the company’s user engagement metrics, while monitoring how the company guides for the next quarter and full year.
Disney (DIS) - Reports after the close, Tuesday, Feb. 5
Wall Street expects Disney to earn $1.55 per share on revenue of $15.18 billion. This compares to the year-ago quarter when earnings came to $1.89 per share on revenue of $15.35 billion.
What to watch: The good news for Disney is that, unlike previous quarters, analysts won’t be so focused on the numbers. And that’s partly because expectations are so low. The quarterly estimates above calls for year-over-year declines on both revenue and EPS. Still, on Tuesday the media and entertainment behemoth will need to convince the Street that its growth ambitions to compete with Netflix (NFLX) as a full over-the-top streaming platform is on track. Then there’s the topic of Twenty-First Century Fox (FOX , FOXA), which Disney has acquired and has yet to close. And, of course, we can’t discuss Disney without mentioning its sports network ESPN, which generates the lion share of profits, but also the bulk of its expenses.
General Motors (GM) - Reports after the close, Wednesday, Feb. 6
Wall Street expects GM to earn $1.22 per share on revenue of $36.48 billion. This compares to the year-ago quarter when earnings came to $1.65 per share on revenue of $37.72 billion.
What to watch: Although there are tons of reasons to be bearish the stock, including its recently-announced 2.7% decline in sales for Chevrolet, Cadillac and Buick brands, the company has delivered a positive earnings surprise in three out of the past four quarters. The prospects for the next two years, however, aren’t bright. Neither revenue or earrings is expected to grow during that span. It’s for this reason the company has begun to layoff workers in an effort to remain profitable. The reductions come as GM undergoes a massive restructuring announced by CEO Mary Barra in November. Wednesday’s earnings call may shed some light on how this restructuring will unfold.
Twitter (TWTR) - Reports before the open, Thursday, Feb, 7
Wall Street expects Twitter to earn 25 cents per share on revenue of $869.5 million. This compares to the year-ago quarter when earnings came to 19 cents per share on revenue of $731.56 million.
What to watch: There’s no question that, after a tumultuous couple of years, Twitter has finally gotten things going in the right direction. But with that comes higher expectations. As such, the focus on Thursday is going to be on the numbers, which — due to the tougher year-over-year comparisons — will reveal just how much room for improvement the company has left. Namely, can it continue to achieve increased advertiser demand? What will 2019 guidance look like? And will the company’s commentary surrounding strategy and execution serve as a catalyst to get investors excited about said guidance?