WOOF - Stocks To Watch: All Eyes On The Federal Reserve

2023-03-18 10:30:11 ET

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The headliner event of the week will be a crucial two-day meeting of the Federal Reserve's policy-making committee with some investors on a razor's edge over the potential for an unexpectedly hawkish tilt. At the time of publication, futures trading implies a 74.5% probability of a 25 basis point rate hike by the Fed and a 25.5% chance of no hike at all. The odds for a 50-point hike are now effectively off the table after being a betting favorite just a few weeks ago. Opinion is divided on the tactics the central bank should take given the recent events. Bank of America forecasts the target range will be raised appropriately by the Fed by 25 points to 4.75% to 5.00% with the short-term loans offered through the Bank Term Funding Program seen as an effective backstop to more banking fallout. However, Moody's analyst Mark Zandi is firm that the Fed should not tighten policy due to higher recession risks. "If they raise rates, that qualifies as a mistake, and I would call it an egregious mistake," he warned.

Outside of the Fed drama, economic reports, due to pouring in, include the existing home sales update on March 20, the new home sales numbers on March 23, and the durable goods orders report on March 24. The corporate calendar features one of the biggest events of the year for Nvidia (NVDA). The chipmaker's GTC Conference will be closely watched across the tech sector, with some discussion on AI chips anticipated. Nike (NKE) will also report earnings next week with investors looking to get a beat on how demand and inventory trends are holding up for the Dow 30 stock.

Earnings spotlight: Monday, March 20 - Foot Locker (FL).

Earnings spotlight: Tuesday, March 21 - Tencent Music (TME), On Holding (ONON), Nike (NKE), and GameStop (GME).

Earnings spotlight: Wednesday, March 22 - Baozun (BZUN), Winnebago (WGO), Petco (WOOF), Ollie's Bargain Outlet Holdings (OLLI), EVgo (EVGO), Hyzon Motors (HYZN), Cassava Sciences (SAVA), KB Home (KBH), and Chewy (CHWY).

Earnings spotlight: Thursday, March 23 - Accenture (ACN), Darden Restaurants (DRI), and General Mills (GIS).

Earnings spotlight: Friday, March 24 - Express (EXPR).

Volatility watch: Hyzon Motors (HYZN) and Workhorse Group (WKHS) are near the top of the list of stocks with the highest percentage of short interest outstanding. Options trading has spiked over the last week on Credit Suisse (CS) as investors bet on the bank's odds for survival.

IPO watch: Chinese park operator Golden Heaven Group (GDHG), Singapore-based real estate brokerage firm Ohmyhome Ltd (OMH), and contract logistics services Shengfeng Development (SFWL) are all expected to price their IPOs and start trading next week.

Dividend watch: Some of the notable companies expected to boost their quarterly dividend payouts next week include Shoe Carnival (SCVL) to $0.11 from $0.09, TJX Companies (TJX) to $0.3325 from $0.2950, Oxford Industries (OXM) to $0.58 from $0.55, and Cousins Properties (CUZ) to $0.33 from $0.32.

Spotlight on Nvidia: Santa Clara-based Nvidia (NVDA) will host its highly-anticipated GTC event from May 20-23. CEO Jensen Huang will deliver the opening keynote. The four-day event is expected to cover Nvidia's latest advancements in generative AI, the metaverse, large language models, robotics, cloud computing and more. Just in front of GTC, Morgan Stanley upgraded the GPU maker to Overweight, with the investment firm noting the artificial intelligence megatrend has become too much to ignore. Analyst Joseph Moore noted that the challenges in gaming and the data center have largely played out, but the development of generative or generational AI will overshadow any other trends. "The stock will continue to be hard to ignore in an otherwise challenging semiconductor environment," he previewed.

Corporate events: Hershey Company (HSY) will host an Investor Day event on March 22. The food giant plans to provide an update on the company's strategic plans and financial outlook. AvePoint (AVPT) and Autodesk (ADSK) also have key events scheduled on the same day. On March 23, Altria (MO) will hold its Investor Day event. The tobacco company will look to recharge shareholders unhappy over the results of Altria investments with JUUL, cannabis, and the recently terminated commercialization agreement with Philip Morris International's (PM) heat-not-burn IQOS product. Look for an update from Altria (MO) management on capital allocations plans during the event. Check out Seeking Alpha's Catalyst Watch for more events scheduled for next week.

Nike earnings preview: Nike (NKE) is expected to report revenue of $11.44B and EPS of $0.54 with its FQ3 earnings release on March 21. Wall Street analysts have been incrementally more bullish on Nike (NKE) ahead of the earnings release, including both UBS and Morgan Stanley. UBS thinks Nike can clear the market's bar, even with sentiment positive. Nike is said to have strong brand momentum with consumers globally and an improved inventory position. The firm forecasts a $0.05 EPS beat and modestly raise its FY23 outlook. Shares are expected to get an extra boost from a positive initial FY24 outlook from the Oregon-based athletic apparel giant. Morgan Stanley also predicted a narrow EPS beat for Nike on strong performance from the EMEA segment. Potential North American softness and a highly promotional channel are called out as downside risks. On Seeking Alpha, contributor Colin Tedards said the first thing investors should look at with the Nike numbers is the margin line to see how the company offset the impact of inventory, shipping, logistics and currency headwinds. Shares of Nike are up 1.38% on a year-to-date basis.

Quant ratings: Stocks with recent quant rating changes include MacroGenics (MGNX) to Strong Buy from Hold, DoorDash (DASH) to Buy from Hold, and Volta (VLTA) to Sell from Hold. See the stocks with the very highest rated Seeking Alpha Quant Ratings.

Notable conferences: The major conferences of the week include the Piper Sandler Annual Energy Conference, D.A. Davidson 6th Annual Consumer Growth Conference, BofA Global Research Global Industrials Conference, and UBS Infrastructure Conference.

Barron's mentions: The cover story makes the case that major bank stocks could be attractive after the U.S. banking system averted a full-blown crisis due to the actions by the Federal Reserve and FDIC. While small and mid-sized banks are expected to face more challenges, the nation's largest banks feature product breadth, technology advantages, capital, and size to ride out a period of macroeconomic disruption. Bigger banks are also expected to benefit from a flood of new deposits and accounts from bank customers looking for stability. For investors, the stocks of Bank of America (BAC), Citigroup (C), JPMorgan (JPM), Wells Fargo (WFC), Goldman Sachs (GS), and Morgan Stanley (MS) are said to now trade at reasonable forward earnings multiples and the dividend yields for the group range from 3.0% to 4.5%.

Sources: EDGAR, Bloomberg, CNBC, Reuters

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