• Trump’s inauguration and the fourth-quarter earnings season will be the focus in the holiday-shortened week ahead.
• With its transformative business model and clear growth trajectory, Netflix looks like an attractive buy for investors looking for quality growth.
• Procter & Gamble faces operational challenges and tepid growth, making it less attractive in the current market environment.
• Looking for more practical business ideas? Sign up here to get 50% off at InvestingPro!
U.S. stocks rose on Friday ahead of Donald Trump’s inauguration, as the Dow Jones Industrial Average and S&P 500 had their best week since the November election amid signs of easing inflation.
For the week, the Dow and S&P 500 advanced 3.7% and 2.9%, respectively, while the tech-heavy Nasdaq Composite rose 2.5%.
Source: Investing.com
Next week is expected to be another eventful week as investors continue to assess the outlook for the economy and interest rates.
US markets will be closed on Monday for the Martin Luther King holiday. President-elect Trump’s inauguration will also be on Monday, and the incoming president is expected to issue a series of executive orders from day one.
Source: Investing.com
Meanwhile, the fourth-quarter earnings season is moving full speed ahead, with reports expected from several high-profile companies, including Netflix (NASDAQ:NFLX), American Express (NYSE:AXP), Procter & Gamble (NYSE:PG), Johnson & Johnson. (NYSE:JNJ), Verizon (NYSE:VZ), GE Aerospace (NYSE:GE), 3M Company (NYSE:MMM), United Airlines (NASDAQ:UAL) and American Airlines (NASDAQ:AAL).
Bitcoin and cryptocurrencies will also be closely watched.
Regardless of which direction the market takes, below I highlight one stock that will likely be in demand and another that could see another decline. However, remember that my schedule is only for next week, Monday, January 20th to Friday, January 24th.
For investors looking to allocate capital this week, Netflix stands out as a huge growth opportunity. The streaming giant’s shift toward advertising, live events and monetizing popular content like ‘Squid Game’ are important tailwinds that could push the stock higher in the coming week.
The Los Gatos, California-based Internet television network is scheduled to release its fourth-quarter update after the U.S. market closes on Tuesday at 4:00 p.m. ET. A call with Ted Sarandos and Greg Peters, co-CEOs, is scheduled for 5:00 pm ET.
Market participants expect considerable movement in NFLX stock after the print drops, according to the options market, with a possible implied move of nearly 9% in either direction. The stock rose 8.8% after the last earnings report was released in mid-October.
Source: InvestingPro
Earnings estimates have been revised upward 27 times in the last 90 days, reflecting growing confidence among analysts. Only four downward revisions have been noted, underscoring Wall Street’s bullish sentiment toward the entertainment powerhouse.
Netflix is seen earning $4.21 per share, which is a staggering 99% increase from the previous year. Meanwhile, revenue is expected to rise 15% year over year to $10.1 billion.
The company has shifted its focus from pure subscriber growth to prioritizing operating margins and revenue expansion. This pivot includes a robust advertising model, which is becoming a cornerstone of its growth strategy.
On the content front, the successful launch of ‘Squid Game Season 2’ and other high-profile projects ensure a steady stream of engagement. Netflix is also venturing into live events, including NFL games and boxing matches, broadening its appeal to a broader audience.
NFLX stock finished at $858.10 last Friday. At current levels, Netflix has a market capitalization of $366.8 billion. Shares are down 3.7% through 2025 after posting an 83% annual gain last year.
Source: Investing.com
It’s worth mentioning that Netflix has an excellent InvestingPro financial health score of 3.1/5.0, reflecting its solid financials, strong growth prospects, and innovative strategies.
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On the other hand, Procter & Gamble faces operational challenges and tepid growth, making it less attractive in the current market environment. The global consumer products company is scheduled to report its fiscal second-quarter earnings report before the stock market opens on Wednesday at 6:55 a.m. ET.
The expected move in the options market is approximately 3.4% up or down. Shares fell 1.6% after the last earnings report was released in October.
Underscoring several challenges facing Procter & Gamble, 18 of 19 analysts surveyed by InvestingPro lowered their sales estimates ahead of the release, citing weak consumer demand and a challenging outlook.
Source: InvestingPro
P&G is expected to earn $1.86 per share, rising just 1.1% from EPS of $1.84 in the year-ago period. Meanwhile, revenue is forecast to rise 2.2% year over year to $21.6 billion. These modest growth projections reflect increasing challenges for the company.
The consumer goods giant recently faced operational disruptions, including a ransomware attack on one of its shipping suppliers. The attack could affect distribution efficiency and hurt margins in the short term.
Additionally, increasing competition in key markets and inflationary pressures on raw materials are expected to limit profitability.
As such, CEO Jon Moeller may take a cautious tone and provide soft guidance to reflect supply chain disruptions and weakening margins.
PG stock closed last Friday’s session at $161.13, not far from its lowest level since April 2024. At its current valuation, the Cincinnati-based consumer goods company has a market capitalization of 379.5 billion dollars. Shares fell 3.8% to start the new year.
Source: Investing.com
Although P&G remains a dominant player in the consumer goods sector with strong brands like Tide and Gillette, its growth is slowing and the stock appears fully valued. Trading on a forward price-to-earnings (P/E) ratio of 23.7, the stock may not offer much upside at current levels.
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Divulgation: At the time of writing, I am long the S&P 500 and Nasdaq 100 through the SPDR® S&P 500 ETF (SPY) and the Invesco QQQ Trust ETF (QQQ). I also have long positions in the Invesco Top QQQ ETF (QBIG), the Invesco S&P 500 Equal Weight ETF (RSP), and the VanEck Vectors Semiconductor ETF (SMH).
I regularly rebalance my portfolio of individual stocks and ETFs based on an ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The opinions discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insights.
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