CIFR - Stocks To Watch: Spotlight On FedEx Earnings Paris Air Show And Cava

2023-06-17 10:30:00 ET

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Federal Reserve Chairman Jerome Powell will be in the spotlight next week with appearances on Capitol Hill in front of the House Financial Services Committee and the Senate Banking Committee. Powell's testimony will supplement the release of the Fed's semi-annual monetary policy report. Meanwhile, the economic calendar is light, although reports on building permits, housing starts, MBA mortgage applications, and existing home sales will give investors a closer at the real estate sector. The earnings calendar features reports from FedEx (FDX), Winnebago (WGO), and Darden Restaurants (DRI). Investors will also be watching to see if the momentum rallies for highly-shorted stocks can extend. Over the last week, the list of stocks with more than 20% short interest of total float that showed big rallies included Nikola (NKLA), EHang (EH), Carvana (CVNA), Workhorse Group (WKHS), Hyzon Motors (HYZN), Cipher Mining (CIFR), C3.ai (AI), Virgin Galactic (SPCE), Zentalis Pharmaceuticals (ZNTL), and Upstart (UPST).

Earnings spotlight: Tuesday, June 20 - FedEx (FDX) and La-Z-Boy (LZB).

Earnings spotlight: Wednesday, June 21 - KB Home (KBH), Winnebago (WGO), and Steelcase (SCS).

Earnings spotlight: Thursday, June 22 - Accenture (ACN), Darden Restaurants (DRI), and FactSet Research (FDS).

Volatility watch: Short interest on both Zynex (ZYXI) and Arhaus (ARHS) stands at more than 25% of total float. Options trading volume is elevated on Nikola (NKLA) and Mullen Automotive (MULN) once again. CAVA Group (CAVA) will be closely watched after its rocket-shot IPO debut.

IPO and spinoff watch: GEN Restaurant Group (GENK) is expected to price its $33M IPO and start trading next week. The company operates a chain of Korean BBQ restaurants in the United States. GEN Restaurant reported revenue of $169M for the 12-month period that ended on May 26 and average unit volume of $6M. The chain is located in Arizona, Hawaii, Nevada, New York and Texas, as well as its home state of California. CAVA Group (CAVA) will also be closely watched after shares soared more than 100% off its IPO pricing level in their public debut.

Dividend watch: Companies forecast to boost their quarterly payouts include Kroger (KR) to $0.28 from $0.26, Darden Restaurants (DRI) to $1.25 from $1.21, and Saul Centers (BFS) to $0.60 from $0.59. See Seeking Alpha's list of Quick Dividend Stock Picks.

Paris Air Show preview: The return of the Paris Airshow will capture plenty of attention next week across the global aerospace and defense sector. Boeing (BA) will debut the 737 Max 10 and 777-9 commercial jets in demonstrations at the air show. Updates on production rates from Boeing (BA), Embraer (ERJ), and Airbus SE (EADSF) will be closely watched with orderbooks largely filled through 2027. Ahead of the aviation event, Bank of America noted that demand for aircraft remains robust as travel demand continues to rebound and airlines/lessors are fleeting planning for the next decade. The firm sees the potential for airlines such as Air India, Emirates, Japan Airlines (JAPSY), Vietnam Airlines, Pegasus, Finnair (FNNNF), Riyadh Air, Turkish Air and Indigo to add orders from either Boeing or Airbus. Also watch Archer Aviation (ACHR) and Stellantis N.V. (STLA) with an update anticipated on scaling manufacturing of Archer's Midnight eVTOL aircraft as it gets closer to commercialization in 2025. Dassault Aviation (DUAVF), Constellium (CSTM) and Odysight.ai (SCTC) are also looking to create some buzz with their presentations. For short-term investors, Goldman Sachs tipped that the Paris event looks like an opportunity for tactical trades in options with recent data points suggesting continued strength in commercial, recovery in international/long-haul travel and improvement in supply chain/labor issues. General Electric (GE) and Spirit AeroSystems (SPR) are seen as two stocks that could get a jolt from Paris.

FedEx earnings preview: FedEx (FDX) is due to report its fiscal fourth quarter results after the closing bell on June 20. The earnings print will be the first from the Memphis-based transportation company since it announced a sweeping reorganization of its business during an April investor event. Consensus expectations call for FedEx (FDX) to report revenue of $22.7B, including Express segment revenue of $10.8B, Ground segment revenue of $8.4B, Freight segment revenue of $2.5B, and Services segment revenue of $77M. FedEx is also forecast to disclose EPS of $4.87 and an adjusted operating margin of 7.5%. Analysts think FDX shares will take their direction from how the guidance comes in amid the uneven economic backdrop. Looking ahead, Seeking Alpha author Brian Gilmartin noted comparisons will ease up for the company in the second half of the calendar year. He expects to see the "normalized" high single-digit revenue growth and low teens EPS growth once the cost reductions or expense savings are made permanent in calendar years 2024-2025. Gilmartin called the stock at its current level and believes it has at least 20% upside. A wildcard to watch on the conference call is management's commentary on if FedEx has picked up market share from UPS amid the ongoing labor negotiations and strike potential. Shares of FedEx (FDX) rose 8% the last time the shipper reported earnings. Options trading implies a swing of 6.5% up or down after the new earnings report drops. FedEx and rival UPS (UPS) have moved up about 5% over the last week ahead of the earnings blockbuster.

Corporate events: Companies holding investors events on June 20 include Credicorp Ltd. (BAP), Radian (RDN), Albemarle Corp. (ALB), Great-West Lifeco (GWLIF), Mind Medicine (MNMD), and Adtalem Global Education (ATGE). Hewlett Packard Enterprise (HPE) will also hold its HPE Discover Edge-to-Cloud Conference. The event has attracted attention from analysts in the past and contributed to ratings boosts. Dollar Tree (DLTR) will hold an investor conference on June 21 that includes an executive question-and-answer session. Shares of Dollar Tree have not recovered from their Q1 earnings tumble. Intel (INTC) will hold an investor webinar to provide an update on the company's internal foundry model. Companies due to hold investor events on June 22-23 include MongoDB (MDB), NRG Energy (NRG), Fastly (FSLY), Samsara (IOT) and DexCom (DXCM). See a detailed list of key events for next week in Seeking Alpha's Catalyst Watch .

Investor conferences: The conference schedule for the week ahead includes the ROTH 9th Annual London Conference, Jefferies Consumer Conference, and J.P. Morgan Energy, Power and Renewables Conference.

Quant ratings: Stocks with recent quant rating changes include Super Micro Computer (SMCI) to Strong Buy from Hold, Dole plc (DOLE) to Buy from Hold, and J.Jill (JILL) to Sell from Hold. See the stocks with the very highest rated Seeking Alpha Quant Ratings.

Barron's mentions: Freeport-McMoRan (FCX) is called out as a stock that could rise 50% if the price of copper recovers as part of a long-term cycle. The Phoenix-based company is noted to already have the strongest balance sheet of any copper miner and a strong management team. The ability of Freeport-McMoRan to return capital to shareholders is also said to make it attractive. Crucially, consensus estimates from analysts on the mining stock are not believed to factor in the impact on the bottom line from a rise in copper prices. Over the long term, Freeport-McMoRan is expected to benefit from the adoption of electric vehicles and other forms of alternative energy. Shares of Freeport-McMoRan trade about 14% below their 52-week high.

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