BGLC - Stocks To Watch: Retail Reckoning Transportation Sector Turmoil And A New EV Player Debuts

2023-08-12 11:00:00 ET

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The retail sector will be in the spotlight next week with Home Depot (HD), Target (TGT), and Walmart (WMT) lined up to issue their Q2 earnings reports and update on consumer trends. The U.S. Census Bureau will also issue the July Retail Sales Report, which is forecast to show a slight acceleration from the pace seen in June. Traders will also be watching the release of FOMC Minutes from the Fed's July meeting for more clues on the direction of interest rates after the July CPI print calmed some nerves. "Overall, the underlying details of the July CPI inflation data are consistent with ongoing progress on disinflation. Although core services inflation trended higher on the month, other component-level trends are evolving in line with our expectations. In particular, rents and used car prices softened, alongside clothing and airfares," updated Goldman Sachs macro strategist Gurpreet Gill. Asia will also be a topic of discussion next week as the U.S. prepares to host a summit at Camp David with Japan Premier Minister Kishida and South Korea President Yoon Suk Yeol. The summit will follow closely after President Joe Biden signed off on an executive order that will prohibit some new U.S. investment in China in sensitive technologies like computer chips and require government notification in various other tech sectors. A couple of wildcards to watch in the week ahead will be the flurry of 13F filings, which will indicate hedge fund positions at the end of Q2, and tension rising in the battle between the UAW and Detroit automakers General Motors (GM), Ford (F), and Stellantis (STLA).

Earnings spotlight: Monday, August 14 - Suncor Energy (SU) and Rumble (RUM)

Earnings spotlight: Tuesday, August 15 - Home Depot (HD), Agilent Technologies (A), On Holding (ONON), and CAVA Group (CAVA).

Earnings spotlight: Wednesday, August 16 - Cisco (CSCO), TJX Companies (TJX), Target (TGT), JD.com (JD), and Brinker International (EAT).

Earnings spotlight: Thursday, August 17 - Walmart (WMT), Applied Materials (AMAT), Ross Stores (ROST), Farfetch (FTCH), and Tapestry (TPR).

Earnings spotlight: Friday, August 18 - Deere (DE), Palo Alto Networks (PANW), and Estee Lauder (EL).

Volatility watch: Short interest on Fisker (FSR) and Blink Charging (BLNK) are at high levels heading into their earnings reports. Options trading volume is elevated on Yellow (YELL) and AEye (LIDR) once again.

IPO and spinoff watch: Sacks Parente Golf (SPGC) is expected to start trading as early as next week. The golf equipment company describes itself as the world leader in innovative and cutting edge technology in putters, shafts and grips. The IPO is expected to generate proceeds of $12M. Sacks Parente will join Topgolf Callaway Brands (MODG) and Acushnet Holdings (GOLF) The quiet periods will expire on Oddity Tech (ODD), BioNexus Gene Lab (BGLC), and Turnstone Biologics (TSBX) to free up analysts to post ratings. The IPO lockup periods expire for blocks of shares Forza X1 (FRZA), Graphex Group (GRFX), Bullfrog AI (BFRG), Reborn Coffee (REBN), and NFT Gaming (NFTG). All four of those stocks have fallen since their public market debuts.

Dividend watch: Companies projected to boost their quarterly dividend payouts include Intuit (INTU) to $0.88 from $0.78, Virtus Investment Partners (VRTS) to $1.80 from $1.65, and Altria (MO) to $0.98 from $0.94. See Seeking Alpha's list of Quick Dividend Stock Picks.

Retail sector preview: The retail sector will be in the spotlight in the week ahead, with Home Depot (HD), Target (TGT), and Walmart (WMT) lined up to report earnings. There is growing confidence that Walmart (WMT) will post another beat-and-raise quarter as a clear beneficiary of consumers trading down. Walmart (WMT) is forecast to report revenue of $159.0B, U.S. same-store sales growth of 4.2%, and EPS of $1.70. Ahead of the report, Morgan Stanley highlighted that the Bentonville giant's ancillary businesses continue to cushion the company from macro shocks, especially the digital business. Wells Fargo noted that the read-through from WMT's recent updates has been negative for most staples retail peers. In particular, concerns over market share gains, disinflation, and merchandising demand has negatively impacted Kroger (KR), (ACI), Dollar General (DG), and Target (TGT), which steps into the earnings confessional a day ahead of Walmart. Estimates on Target (TGT) have already been whacked by analysts on the expectation that comparable sales fell by about 3% during Q2 compared to year ago. While traffic trends have improved over the last five weeks, Target is seen as at high risk of a negative impact from student loan repayments resuming and pressure on discretionary spending, which accounts for a higher percentage of sales at TGT than WMT. Home Depot (HD) also saw a wave of downward EPS revisions ahead of its earnings report, with customer transactions expected to have fallen 3.6% from a year ago. The home improvement stock was also recently downgraded at Telsey Advisory due to the weak housing market. The firm said housing data seems to show a bottoming for the housing market, with the trend line indicating some stability and less negative trends, but warned the bottoming phase has the potential to take some time to play out.

Crypto moves: Cryptocurrency traders will be on high alert in the week ahead, with the SEC expected to respond to Grayscale’s GBTC lawsuit filing and the ARK 21Shares bitcoin ETF refiling. The regulator is also expected to respond to seven other bitcoin ETF filings during the first week of September. Bitcoin (BTC-USD) is up more than 70% on a year-to-date basis, but was back below the $30K threshold at publication time. Also next week, Russia's central bank is expected to start real-world tests of its digital ruble with 13 banks and a limited circle of their clients. The first phase of piloting the central bank digital currency will focus on digital wallets, transfers between citizens, simple automated payments, and purchases and services using a QR code. Those participating in the pilot will have the ability to pay with digital rubles at 30 retail outlets located in 11 Russian cities, the Bank of Russia said. The list of pilot participants is expected to be expanded by the end of 2023 by attracting both citizens and companies.

Spotlight on transports: The slide by trucking company Yellow Corp. (YELL) into bankruptcy after years of financial struggles and the huge wage increases recently won by the Teamsters in its new five-year contract with United Parcel Service (UPS) have rattled the transportation sector. As analysts continue to scramble to compute the financial implications of those wildcards in the background and the uncertain macroeconomic backdrop, the two-day Deutsche Bank Transportation Conference scheduled for next week takes on added significance. Participating companies include Canadian Pacific Kansas City, CSX (CSX), FedEx (FDX), GXO Logistics, J.B. Hunt Transportation (JBHT), Knight-Swift Transportation (KNX), Norfolk Southern (NSC), Old Dominion Freight Line (ODFL), Saia (SAIA), Star Bulk Carriers (SBLK), and UPS (UPS).

Meet the newest electric vehicle stock: Vietnamese electric vehicle maker VinFast (VFS) will begin trading on August 14. VinFast manufactures and exports a portfolio of e-SUVs, e-scooters, and e-buses across Vietnam, North America, and, soon, Europe. The company operates a state-of-the-art automotive manufacturing complex in Hai Phong that boasts up to 90% manufacturing automation and an annual production capacity of up to 300K units per year in phase 1. VinFast became a fully electric vehicle manufacturer in 2022, and has since delivered four EV models (VF e34, VF 8, VF 9 and VF 5) in Vietnam. On July 28, VinFast broke ground for the construction of its electric vehicle manufacturing site in North Carolina, marking a significant step in its global expansion and the company's supply chain development in North America. VinFast CEO Le Thi Thu Thuy expressed confidence in the brand's future in the U.S. "We hope the construction of the factory in Chatham County will contribute to advancing the clean-energy economy in the U.S.," she said. VinFast landed a $1.2B incentive package from North Carolina to set up manufacturing in the state. VinFast expects the production site in North Carolina to have an annual capacity of 150K vehicles and serve the North American market.

Corporate events: The three-day EnerCom Denver energy investment conference will begin in Denver, Colorado. The schedule includes a broad group of producers; midstream and oilfield service companies; emerging energy-related technology; alternative energy and traditional oil and gas start-up ventures; as well as panels on compliance trends, carbon capture, and M&A. A partial list of participants includes Amplify Energy (AMPY), Baytex Energy (BTE), Earthstone Energy (ESTE), Liberty Energy (LBRT), Ranger Energy Services (RNGR), Ring Energy (REI), SandRidge Energy (SD), and VAALCO Energy (EGY). The two-day Sidoti August Micro-Cap Conference will feature presentations from a large number of smaller companies, including Comstock (LODE), Blue Apron (APRN), Mistras (MG), Sidus Space (SIDU), and Xcel Brands (XELB). See a detailed list of key events scheduled for next week in Seeking Alpha's Catalyst Watch .

Quant ratings: Stocks with recent quant rating changes include Palantir (PLTR) to Strong Buy from Hold, Azul (AZUL) to Strong Buy from Hold, and Fox Corporation (FOXA) to Hold from Buy. See the stocks with the very highest rated Seeking Alpha Quant Ratings.

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