Weekly Market Preview: Reasons To Be Thankful and Four Stocks To Watch For the Coming Week (BOX, DELL, HPQ, PANW)
With Thanksgiving fast approaching, this is normally the time, as an investor, I take a step back and evaluate the things I should be thankful for. If you have been an avid reader of this weekly column, you can tell I’m an optimist by nature. Rarely do I recommend selling rallies or not buying dips. This year more than any other, these strategies have paid off.
When factoring in fears about the trade war between the U.S. and China, worries about a global economic slowdown, interest rates, the yield curve, Brexit and a host of rally-killing headlines, this year has not been easy for optimistic investors who have watched the value of their portfolio go down. However, here we are with a few weeks of trading left before the year ends, the major averages are trading near all-time highs. Be thankful.
Stocks closed higher Friday, thanks in part to positive comments on a trade deal by President Trump and his Chinese counterpart Xi Jinping. The Dow Jones Industrial Average gained 109.33 points Friday, or 0.39%, to close at 27,875.6, while the S&P 500 index climbed higher by 6.75 points, or 0.22%, to close 3,110.29. The tech-heavy Nasdaq Composite Index added 13.67 points, or 0.16%, to end the session at 8,519.88.
These gains were hard to imagine during the summer when tweets were enough to send the averages down more than 1% per day. Fast forward five months later, I’m thankful that cooler heads continue to prevail despite what has been a highly volatile trading year. That my 401(K) has returned more than 20% this year underscores the importance of having a long-term perspective.
What’s more, investors should be thankful for bargain-hunting strategies and having the perspective to double-down whenever, say, a bearish (panic) downgrade sends a high-yielding stock lower. Without further ado, here are this week’s stocks to keep an eye on.
Palo Alto Networks (PANW) - Reports after the close, Monday, Nov 25
Wall Street expects Palo Alto Networks to earn $1.03 per share on revenue of $768.02 million. This compares to the year-ago quarter when earnings came to $1.17 per share on revenue of $656 million.
What to watch: Shares of enterprise security specialist Palo Alto has been up and down for most of year, but investors who have stuck with the company amid the tech selloff have done well. The stock is up more than 30% year to date and is within striking distance of its all-time high. On Monday the company’s financial results will either send the stock higher or push it back down to earth. There’s reason to be excited about the company's Next-Gen Security billings expectations, which some analysts believe Palo Alto will easily beat. The question, however, will be with guidance for fiscal 2020 and to what extent can Palo Alto get investors (and analysts) excited about the sector moving forward.
Box (BOX) - Reports after the close, Tuesday, Nov. 26
Wall Street expects Box to post a per-share loss of 1 cent on revenue of $174.63 million. This compares to the year-ago quarter when the loss came to 6 cents per share on revenue of $155.94 million.
What to watch: Box shares have risen 22% over the past three months, besting the 7% rise of the S&P 500 during that span. Is that a sign of better things to come? Although the company has quickly emerged as leader in the highly competitive cloud content management market segment, the market hasn’t fully bought into its long-term growth story. Erik Suppiger, analyst at JMP Securities, recently downgraded the stock to Market Perform from Market Outperform. Suppiger sees this quarter as being "challenging" for Box and will show a slowdown in the company's business pipeline. On Tuesday the company will either affirm the recent performance of the stock to justify the bearishness of analysts.
Dell (DELL) - Reports after the close, Tuesday, Nov. 26
Wall Street expects Dell to earn $1.62 per share on revenue of $23.204 billion. This compares to the year-ago quarter when earnings came to $1.53 per share on revenue of $22.65 billion.
What to watch: Dell has taken on a strategic shift to grow its capabilities in the realm of edge computing, cloud services, artificial intelligence, among other high-growth end markets. These moves, combined with its expertise in premium offerings, particularly with its software and services should eventually pay off. It would seem, however, that investors have taken a wait-and-see attitude towards these efforts. The stock has under-performed the market, rising just 10% year to date, compared with a 24% jump for the S&P 500 index. With the stock trading at around $53, or 24% below the $66 consensus price target, Dell offers an attractive risk-reward trade. On Tuesday a top- and bottom-line beat, along with strong guidance can affirm this belief.
Hewlett-Packard (HPQ) - Reports after the close, Tuesday, Nov. 26
Wall Street expects HP to earn 58 cents per share on revenue of $15.27 billion. This compares to the year-ago quarter when earnings came to 54 cents per share on revenue of $15.37 billion.
What to watch: Is now the right time to bet on HP stock? Earlier this month, investors learned that Xerox (XRX) has had discussions regarding the purchase of HP. While this deal could add synergies to the two printer and copier companies, HP — to this point — has balked at the idea. Xerox is not going without a fight. While HP has delivered several quarters of revenue growth, investors aren’t willing to bet on a sustained recovery in the stock. On Tuesday a potential deal between the two companies will be of interest to analysts and investors. And HP must demonstrate that the improvements shown over the past year can not only be sustained (with or without Xerox), but is deserving of multiple expansion.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.