Six Stocks To Watch For the Coming Week (BABA, CSCO, LYFT, NVDA, PEP, ROKU)

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Stocks ended Friday’s trading session lower, snapping a four-day winning streak on prolonged fears of the coronavirus outbreak.

The Dow Jones Industrial Average lost 277.26 points, or about 1%, to close the session at 29,102.51. Among the Dow’s biggest decliners were Caterpillar (CAT) and Boeing (BA) which fell 2.83% and 1.37%, respectively. Not surprisingly, these are two stocks that are closely tied to the global economy. The S&P 500 index fell 0.54% to close at 3,327.71, while the tech-heavy Nasdaq Composite Index gave back 0.54% to close at 9,520.51.

Investors were in risk-off mode. Surprisingly, even a stellar January jobs report which beat expectations, could not stem the declines. For January, the U.S. economy added 225,000 jobs, well above the 165,000 jobs economists were expecting. Average hourly wages rose 0.2%, according to the Labor Department. The better-than-expected jobs data aside, investors seemingly adopted a strategy to lock in gains from the previous four trading sessions. Concerns about the effect the coronavirus could have on the Chinese economy continues to increase.

Despite Friday’s losses, however, the benchmarks still produced meaningful returns for the week, lead by Nasdaq’s 4% gain%. The Dow, meanwhile, was up 3% for the week, while the S&P 500 index added 3.2%. It remains to be seen what the outcome of the coronavirus will be for China and the U.S. But with the positive direction of the U.S. economy, growth and profit expectations will continue to trend higher as evidenced by the positive earnings results we have witnessed thus far. Here are this week’s stocks to keep an eye on.

Lyft (LYFT) - Reports after the close, Tuesday, Feb. 11

Wall Street expects Lyft to lose $1.36 per share on revenue of $984.17 million. This compares to the previous quarter when it reported a loss of 41 cents per share on revenue of $955.6 million.

What to watch: Lyft stock has gone on a nice ride over the past six months, delivering more than 15% returns. The country's No. 2 ride-sharing service will set out to prove that those gains are not only warranted, but also sustainable. The company’s Q3 EBITDA miss sent the stock down more than 3% in November. Concerns about the company's profitability and quarterly operating losses has plagued the stock, along with that of its chief competitor Uber (UBER). But as Lyft is spending to invest in its infrastructure, it's getting a return on those investments evidenced by the 28% rise in Q3 active riders. The company is also working to curtail costs on other loss-making aspects of the business. On Tuesday if Lyft can deliver a top- and bottom-line beat, while guiding lower capex, the shares may drive back to their IPO level of $72.

Cisco (CSCO) - Reports after the close, Wednesday, Feb. 12

Wall Street expects Cisco to earn 76 cents per share on revenue of $11.98 billion. This compares to the year-ago quarter when earnings came to 73 cents per share on revenue of $12.45 billion.

What to watch: After issuing disappointing Q2 guidance, which sent its stock down some 5% in November, Cisco has quite a bit to prove on Wednesday, particularly amid better-than-expected earnings results from enterprise and datacenter names such as Microsoft (MSFT) and Intel (INTC) which suggests IT spending is in recovery mode. The company must prove it can deliver sustained revenue growth despite operating in a mature market. The Dow bellwether continues to scale back its switching and routing businesses, while trying to develop growth businesses within service areas such as security, the cloud, data center and analytics. Progress in these areas have been better-than-expected. The stock, however, has fallen 8% in six months.

Alibaba (BABA) - Reports before the open, Thursday, Feb. 13

Wall Street expects Alibaba to earn $2.12 per share on revenue of $22.82 billion. This compares to the year-ago quarter when earnings came to $1.82 per share on revenue of $17.47 billion.

What to watch: Can Alibaba’s resurgence continue? Its shares have skyrocketed 36% over the past six months, compared to a 15% rise for the S&P 500 index. Is this an ideal time to buy or have investors missed the boat? BABA’s recent investments, particularly its "new retail" efforts aimed at merging elements of online and offline commerce, are paying off. The Chinese e-commerce and cloud giant has rolled out various products aimed at meeting the needs of customers who are migrating more towards the realm of Artificial Intelligence, Machine Learning and Internet of Things. On Thursday the company must give investors a reason to believe the stock has more room to run.

PepsiCo (PEP) - Reports before the open, Thursday, Feb. 13

Wall Street expects PepsiCo to deliver EPS of $1.45 per share on revenue of $20.23 billion. This compares to the year-ago quarter when earnings came to $1.49 per share on $19.52 billion in revenue.

What to watch: With reported Q3 organic revenue growth of 4.3%, Pepsi is showing no signs that slowing down. The company continues to find ways to give consumers the healthy beverage and snack options that have become a necessity for those who are advocating for foods with low salt, low sugar, and more natural ingredients. Pepsi stock, meanwhile, has responded, delivering returns of 14% and 8% in six months and thirty days, respectively. For the share price to remain bubbly, on Thursday the company will need to plant more optimism about the sustainability of its growth drivers, including its Frito-Lay North America business which grew 5.5% in the third quarter, which drove total core gross margin rate to improve 90 basis points to 55.4%.

Roku (ROKU) - Reports after the close, Thursday, Feb. 13

Wall Street expects Roku to lose 13 cents per share on revenue of $392.68 million. This compares to the year-ago quarter when the company earned 5 cents per share on revenue of $275.70 million.

What to watch: With year-to-date decline of 7.21%, including 10% over the past months, it would seem investors are taking a wait-and-see attitude with Roku. While the company has been a massive money-maker for investors, delivering 165% returns over the past year, Roku’s valuation remains an issue even for growth investors. But there’s not much more the company can do after beating Q3 on both the top and bottom lines and raising its Q4 and full-year guidance. All told, with new products such as Apple’s (AAPL) Apple TV and Disney’s (DIS) Disney+ now in the fold, this further expands Roku’s platform growth prospects and the company on Thursday is poised to further assert itself as the go-to entertainment streaming platform.

Nvidia (NVDA) - Reports after the close, Thursday, Feb. 13

Wall Street expects Nvidia to earn $1.67 per share on revenue of $2.98 billion. This compares to the year-ago quarter when earnings came to 80 cents per share on revenue of $2.21 billion.

What to watch: Shares of the graphic chip powerhouse has gone on an impressive run, surging more than 60% in six month, while rising 7% year to date, compared to a 3% rise in the S&P 500 index. Three straight earnings beats have gotten investors more optimistic about the market for graphics cards used not only in video games, but also due to the company’s exposure to multiple secularly growth markets such as the datacenter, autonomous driving, artificial intelligence, among others. All told, Nvidia’s guidance on Thursday could be a catalyst for Nvidia stock to deliver even more returns for the rest of the new year.

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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Richard Saintvilus

After having spent 20 years in the IT industry serving in various roles from system administration to network engineer, Richard Saintvilus became a finance writer, covering the investor's view on the premise that everyone deserves a level playing field. His background as an engineer with strong analytical skills helps him provide actionable insights to investors. Saintvilus is a Warren Buffett disciple who bases his investment decisions on the quality of a company's management, its growth prospects, return on equity and other metrics, including price-to-earnings ratios. He employs conservative strategies to increase capital, while keeping a watchful eye on macro-economic events to mitigate downside risk. Saintvilus' work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. You can follow him on Twitter at @Richard_STv.

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