Walmart, Home Depot, Cisco Systems, Dubai Air Show: Investing Action Plan

The reporting season’s last big week for Dow Jones companies sees reports roll in from Walmart (WMT), Home Depot (HD) and Cisco Systems (CSCO). It’s also a big week for China names, with JD.com (JD), Tencent Holdings (TCEHY) and NetEase (NTES) all on the calendar. Markets may see some effect from inflation and retail sales data Tuesday and Wednesday. And after a powerful earnings-fueled breakout by TransDigm (TDG) on Thursday, defense and aerospace names will be on the radar, as potential orders roll in during the week from the Dubai Airshow.

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Stocks To Watch: Still A Target Rich Market

With the market rally still looking healthy, investors should be looking closely for stocks setting up in a variety of sectors. Nvidia (NVDA), Urban Outfitters (URBN), Costco Wholesale (COST), General Electric[ticker symb=GE] and Datadog (DDOG) are worthy of attention. Nvidia is the flagship stock and company of the AI-led boom. Urban Outfitters is among a handful of young adult apparel retailers showing strength, while shaping a possible handle. Costco Wholesale is among discounters performing well, tinkering with new highs on Friday. General Electric, a big 2023 winner, is just below multiple buy points. Datadog, which surged last week on earnings, could also be working on a handle.

General Electric, IBD Stock Of The Day, Is Enjoying A Beautiful Sunset

Economic Calendar: Whistling Past The Inflation Data

Despite Fed chair Jerome Powell’s mild protestations on Thursday, markets are convinced that rate hikes are done. Inflation and spending data in the coming week may challenge or reinforce that assumption. The consumer price index for October, out Tuesday at 8:30 a.m. ET, is expected to show a tame 0.1% overall increase. Yet core prices, excluding food and energy, are seen rising 0.3% on the month and a steady 4.1% from a year ago.

The producer price index, out Wednesday at 8:30, will help fill out the inflation picture. Components from the report on wholesale prices, including airfares, portfolio management fees and health care services prices, feed into the Fed’s primary inflation report, the PCE price index.

Retail sales for October, also out at 8:30 on Wednesday, are expected to show the recent surge in consumer spending beginning to fade. Economists expect overall sales to dip 0.1%, with a slim 0.1% rise excluding autos and gas.

Home construction and manufacturing also will be in focus. The NAHB Housing Market Index is out Thursday at 10 a.m., followed by October housing starts and building permits on Friday at 8:30 a.m.

November regional manufacturing survey results are due from the New York Fed on Wednesday at 8:30 a.m. and the Philadelphia Fed on Thursday at 8:30 a.m. Industrial production for October is out Thursday at 9:15 a.m.

Dow Jones Earnings: Eyeing Home Depot’s Outlook

In the last big week of the Dow Jones industrials’ earnings season, Home Depot delivers results, along with Walmart and Cisco Systems. Chartwise, Home Depot is in the worst shape of the three, struggling to rebound from lows and facing resistance at both its 200-day and 50-day moving averages. But the outlook will be key, as mortgage rates and demand for refinancing flash positive signs.

Dow Jones Earnings: Cisco Battles Its Doldrums

Cisco Systems reports fiscal Q1 earnings after the market close on Wednesday. Analysts predict EPS growth of 19% to $1.03, with revenue growing 7% to $14.63 billion. “Cisco faces a weak seasonal quarter while backlog declines, making it another disheartening quarter of declining year-over-year orders,” said a Raymond James report. One issue is whether Cisco sticks to fiscal 2024 guidance, which currently calls for EPS of $4.01 to $4.08 and revenue growth of 0% to 2%. Cisco recently agreed to buy software company Splunk (SPLK) for $28 billion in cash. Cisco management says the Splunk deal will not affect capital returns to shareholders.

Dow Jones Earnings: Walmart Vs. Target

Retail giant Target (TGT) releases Q3 results early Wednesday followed by Dow Jones behemoth Walmart on Thursday ahead of the holiday shopping season. Telsey Advisory cut its price target on TGT stock on Friday to 145 from 162 and lowered its third-quarter estimates based on weaker traffic throughout the quarter, softer consumer spending on discretionary products and more promotional activity than anticipated. FactSet analysts expect a 4% earnings decline to $1.48 per share while revenue falls for the second quarter in a row, dropping 4.6% to $25.3 billion. Walmart earnings are seen ticking up 1 cent to $1.51 per share on 4.3% revenue growth to $159.38 billion. WMT stock is trading in a buy zone for a six-week cup base.

Aerospace: Dubai Airshow Set To Launch

The Dubai Airshow takes off next week, marking a five-day showcase of the latest innovations and developments for the aerospace industry as companies compete for lucrative contracts from airlines, militaries and governments. The biennial event runs Monday through Friday and will feature more than 1,400 exhibitors with over 180 aircraft flying and on display. Industry heavyweights like Bombardier, L3Harris (LHX), Emirates Airline will attend, along with emerging players such as Archer Aviation (ARCH), Bellwether Industries and Riyadh Air, the Saudi Arabia Public Investment Fund startup. Lockheed Martin (LMT), RTX (RTX) and GE Aerospace (GE) will be among the host of defense contractors attending the event, which takes on an added significance as tensions rise in the Middle East following the Oct. 7 attack on Israel. The Dubai Airshow this year added an advanced aerial mobility (AAM) pavilion dedicated to drones and eVTOLs, with the likes of Archer Aviation set to debut its Midnight electric Air Taxi. Investors will closely watch the deal-making prowess of Boeing (BA) and Airbus (EADSY) after the aircraft manufacturers struggled with supplier issues throughout the year, causing concerns for their delivery schedules.

S&P 500: High Penalty For Earnings Misses

Despite the market upturn, investors have been quicker than usual to exit shares of companies missing their earnings targets. More than 80% of S&P 500 companies had reported through Tuesday. Of those, 82% have topped the mean analyst earnings per share estimate, FactSet says. That is above the five-year average of 77%. Earnings beats saw an average post-report share price gain of 0.8%, slightly below average. Companies delivering negative surprises, however, have skidded an average 5.2% lower (from two days before to two days after earnings). That is more than double the five-year average miss penalty of 2.3%. If the average holds, it will be the worst quarter for earnings miss losses since Q2 of 2011.   

Monday

Tyson Foods (TSN) announces fiscal fourth-quarter earnings and revenue before the market opens Monday. The report promises a view on inflation, as meat processors close plants across the country in response to what they say is slackening consumer demand and persistently high costs for livestock, feed and wages. Wall Street forecasts EPS plummeting more than 82% to 29 cents with sales declining a fraction to $13.72 billion. For the full fiscal year, analysts see earnings dropping 86% to $1.22 per share while revenue slips less than 1% to $53.26 billion. Tyson Foods stock has failed to recover since sinking more than 16% on May 8 after reporting a surprise loss in the fiscal second quarter. 

Tuesday

On Holding (ONON) reports Q3 results early Tuesday. Analysts expect the Swiss shoemaker’s earnings to increase 143% to 17 cents per share while revenue growth slows for the third consecutive quarter on a 44% rise, to $502 million.

Wednesday

Chinese e-commerce giant JD.com reports third quarter earnings before U.S. markets open Wednesday. Analysts expect earnings of 81 cents per share on sales of $34 billion. That would represent an 8% earnings decrease year over year and a less than 1% sales decline. U.S.-listed shares of JD have lost more than 50% of their value this year amid concerns about consumer spending in China.

Chinese internet giant Tencent reports earnings before U.S. markets open on Wednesday. Analysts expect Tencent to post earnings of 57 cents per share on sales of $21.2 billion. That would represent a 30% earnings increase year over year and 7% sales increase. U.S.-listed Tencent shares have lost 8% this year. 

Cybersecurity firm Palo Alto Networks (PANW) reports fiscal Q1 earnings after the market close Nov. 15. Growth has slowed in its core business — network firewall products — as it continues to make acquisitions to build a broad cloud security platform. Analysts expect Santa Clara, Calif.-based Palo Alto to report earnings of $1.16 per share, up 40% from a year earlier. Revenue will rise 18% to $1.84 billion, analysts estimate. PANW has been trading near its 10-week line after a short-lived breakout from a 14-week consolidation. The stock gapped up sharply in August after the company reported an 80% surge in quarterly profit. Revenue growth topped 20% for the sixth straight quarter.

TJX (TJX) reports third-quarter earnings and revenue early Wednesday. Analysts forecast profit growing 15% to 99 cents per share with sales increasing 7% to $13.05 billion. TJX has averaged 16% earnings growth over the last three quarters and is currently less than 3% from a 93.78 buy point.

Advance Auto Parts (AAP) reports early Wednesday. Wall Street sees a 22% EPS decline despite a 1% revenue gain. Sales growth hasn’t budged above the low single digits since Q3 2021. Earnings have fallen in all but two quarters over that period.

Thursday

Ross Stores (ROST) reports late Thursday. Analysts expect 22% EPS growth on a 6% sales gain. That would mark the third straight quarter of rebounding growth on both the top and bottom lines.

NetEase will release its third-quarter earnings report early Thursday. The China-based internet and online games company is seen earning $1.49 a share, down 6% year over year, on sales of $3.75 billion, up 9%. NTES stock recently broke out of a flat base at a buy point of 110.82

Applied Materials (AMAT) plans to report its fiscal fourth-quarter results late Thursday. Analysts expect the semiconductor equipment maker to earn $1.99 a share, down 2% year over year, on sales of $6.52 billion, down 3%. AMAT stock is in a double-bottom base with a 148.40 buy point.

Gap (GPS) reports late Thursday. Analysts expect a 75% EPS plunge on an 11% revenue drop. That would mark the fourth consecutive quarter of declining sales, with a modest return to growth seen in the current fourth quarter.

Arcos Dorados (ARCO), the world’s largest independent McDonald’s (MCD) franchisee, releases third-quarter results early Thursday. Analysts expect flat earnings at 22 cents per share on 18.8% revenue growth to a record $1.1 billion. ARCO stock is climbing the right side of a 15-week consolidation.

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