• CPI inflation, retail sales, producer prices and more earnings will be the focus this week.
• Shopify stands out as a buy, particularly with the holiday season right around the corner.
• Occidental Petroleum’s challenging outlook makes it necessary to approach it with caution.
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US stocks closed higher on Friday to cap their best week of the year, while the Dow and S&P 500 hit new records following Donald Trump’s decisive election victory.
Investors are betting that a Trump administration will bring lighter regulations and tax cuts that could boost the U.S. economy.
For the week, the blue-chip Dow Jones Industrial Average rose 4.6%, the benchmark S&P 500 gained 4.7% and the tech-heavy Nasdaq Composite rose 5.7%.
Source: Investing.com
The coming week is expected to be eventful as investors assess the outlook for the economy, inflation, interest rates and corporate earnings.
Most important on the economic calendar will be Wednesday’s US consumer price inflation report for October, which is expected to show headline annual CPI rising 2.4% year over year.
Other economic reports worth noting include US retail sales data, as well as a report on producer prices, which will help complete the inflation picture.
Source: Investing.com
This will be accompanied by a host of Fed speakers, including Chairman Jerome Powell on Thursday.
Elsewhere, earnings season continues, and the list of notable names to be reported includes Walt Disney (NYSE:DIS), Home Depot (NYSE:HD), Cisco (NASDAQ:CSCO), Applied Materials ( NASDAQ:AMAT), Shopify (NYSE:SHOP), Spotify (NYSE:SPOT) and Alibaba (NYSE:BABA).
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, November 11 to Friday, November 15.
Shopify stands out as a top buy this week, as the e-commerce software leader is anticipated to deliver another quarter of strong revenue growth and provide an optimistic outlook thanks to solid growth in key metrics.
Shopify’s report will be released on Tuesday at 7:00 a.m. ET. Market participants expect considerable movement in SHOP stock after the print drops, according to the options market, with a possible implied move of about 14% in either direction. The stock rose 26% after its last earnings report in August.
Source: InvestingPro
Analysts have raised earnings forecasts 33 times in recent weeks, according to an InvestingPro survey, underscoring confidence in Shopify’s continued expansion.
Wall Street expects adjusted earnings per share to rise 14% to $0.27, while revenue will rise 23% to more than $2.1 billion, driven by positive business growth and steady demand for the set of Shopify payment software and tools.
Additionally, Shopify has a proven seasonal advantage: Its stock tends to gain momentum ahead of Black Friday and Cyber Monday (NASDAQ:MNDY) (BFCM). Historically, stocks have risen about 7% in the two weeks leading up to the 2016-2023 BFCM, showing resilience as demand picks up ahead of the holiday shopping season.
As more merchants take advantage of e-commerce for the holiday rush, Shopify remains well-positioned to profit.
SHOP shares finished at $87.12 on Friday, their highest closing price since February 12. Shares have gained 11.8% so far this year. At current levels, the Ottawa, Canada-based e-commerce specialist has a market capitalization of $112.5 billion.
Source: Investing.com
As InvestingPro notes, Shopify has a near-perfect ‘Financial Health’ score of 4.0 out of 5.0 thanks to its favorable positioning in the software applications industry, which has allowed it to leverage a resilient business model and strong profit growth.
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By contrast, Occidental Petroleum (NYSE:OXY) faces a more challenging outlook, making it a strong sell this week due to an unpredictable energy market and fluctuating oil prices.
The company is scheduled to release its third-quarter earnings report after the market closes at 4:15 p.m. ET on Tuesday. According to the options market, traders are pricing in a swing of around 6% in either direction for OXY stock after the release.
Current uncertainties in the energy sector make Occidental’s path to growth more complicated as the company navigates complex conditions around global demand and strategic shifts within the industry.
Source: InvestingPro
The oil and gas producer’s earnings outlook has dimmed, with 16 of 17 analysts cutting their EPS forecasts in recent weeks, reflecting a challenging market.
Earnings are expected to decline 36.4% year over year to $0.75 per share on revenue of $7.1 billion, down 4% annually. This decline comes amid oil price volatility and ongoing debates over the outlook for global energy demand.
Although Occidental has taken steps to improve its position within the sector, including recent strategic initiatives, near-term pressures continue to weigh on the stock. Consequently, the risk of poor performance appears greater as the company battles broader market uncertainties and industry-specific headwinds.
OXY stock closed at $50.53 on Friday, not far from a recent 52-week low of $49.51 hit on Nov. 1. Shares are down 15.4% in 2024. At current valuations, the Houston, Texas-based company has a market capitalization of $47 billion. .
Source: Investing.com
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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 and the Invesco QQQ Trust ETF. I am also long the Technology Select Sector SPDR ETF (NYSE:XLK).
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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