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3 Things to Watch in the Stock Market This Week

Stocks rose significantly last week, as the Dow Jones Industrial Average (DJINDICES: ^DJI) crossed back into positive returns for the year and the S&P 500 (SNPINDEX: ^GSPC) pushed deeper into record territory. The S&P now sits 9% higher in 2020, while the Dow is up by less than 1%. Both indexes had been lower by more than 25% during the worst of the stock market swoon in March.

Looking ahead, some widely followed stocks will announce earnings results over the next few trading days, including Zoom Video Communications (NASDAQ: ZM), Five Below (NASDAQ: FIVE), and Campbell Soup (NYSE: CPB). Below we'll take a look at the metrics that might send their stocks moving following those reports.

Zoom's outlook

Zoom has been one of the market's biggest winners since the pandemic struck in early 2020. Shares have soared more than 300% this year, in fact, as millions of new users flocked to the video communication platform while COVID-19 limited in-person interactions. That boost means there are some high expectations around Zoom's second-quarter report on Monday.

A man on a video call.

Image source: Getty Images.

Investors loved what they heard from the company in early June, when executives revealed a 169% sales increase thanks to a flood of new users. Wall Street is looking for more eye-popping growth this week as revenue jumps to over $500 million.

CEO Eric Yuan and his team will have plenty of growth avenues to highlight this week, especially as school season kicks off. Customer metrics like user counts and average spending will be key to watch. But investors will be even more focused on Zoom's outlook for the fiscal third quarter, which began in early August.

Five Below's store expansion plans

Nearly all of Five Below's stores are open again following COVID-19 shutdowns, but investors are still bracing for significant sales declines when the company reports earnings results on Wednesday. The youth-focused retailer wasn't fully operational for much of the fiscal second quarter, and traffic trends have likely remained weak.

CEO Joel Anderson said in early June that management was pleased with early sales trends from initial store reopenings. Since then, though, peers such as TJX Cos. have reported slowing revenue following an early surge from pent-up shopping demand. The industry is also suffering through supply and pricing challenges that threaten most participants' profitability. We'll see on Wednesday how Five Below navigated those issues.

Looking ahead, the company recently reiterated its plans to aggressively grow the store base toward management's 2,500-unit long-term goal. Five Below's comments this week might help investors gauge how quickly the company can speed that expansion pace back up after COVID-19 decelerated it in fiscal 2020.

Campbell Soup's sales volume

Campbell Soup is likely to report some blockbuster demand results on Thursday. Its last fiscal quarter, which ran through late April, showed that organic sales volumes spiked to 17% as consumers started stocking up on home food products. The current quarter includes significant lockdown periods in May and June, so demand increases likely continued. The company in early June predicted that organic growth would land between 5.5% and 6.5% for the full year, compared to its original outlook calling for roughly flat results.

The big question going forward is whether Campbell Soup can see any kind of sustained lift from its COVID-19 momentum. On the one hand, it seems likely that consumers will scale back on prepared food products as they return to normal mobility habits. Yet the company has a potentially valuable opportunity to convince many of its new customers to continue using its meal and snack brands well into fiscal 2021.

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Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Zoom Video Communications. The Motley Fool recommends Five Below and The TJX Companies and recommends the following options: long January 2022 $115 calls on Five Below and short January 2022 $120 calls on Five Below. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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