• CPI inflation, retail sales, producer prices, and more earnings will be in focus this week.
• Shopify stands out as a buy, particularly with the holiday season around the corner.
• Occidental Petroleum’s challenging landscape makes it one to approach with caution.
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U.S. stocks closed higher on Friday to cap off their best week of the year, as the Dow and S&P 500 surged to new records after Donald Trump’s decisive election victory.
Investors are betting that a Trump administration will bring lighter regulation and tax cuts that could boost the U.S. economy.
For the week, the blue-chip Dow Jones Industrial Average climbed 4.6%, the benchmark S&P 500 gained 4.7%, and the tech-heavy Nasdaq Composite popped 5.7%.
Source: Investing.com
The week ahead is expected to be an eventful one as investors assess the outlook for the economy, inflation, interest rates and corporate earnings.
On the economic calendar, most important will be Wednesday’s U.S. consumer price inflation report for October, which is forecast to show headline annual CPI rising 2.4% year-over-year.
Other noteworthy economic reports include U.S. retail sales data, as well as a report on producer prices, will help fill out the inflation picture.
Source: Investing.com
That will be accompanied by a heavy slate of Fed speakers, including Chairman Jerome Powell on Thursday.
Elsewhere, the earnings season continues, with the list of notable names due to report including 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 goes, below I highlight one stock likely to be in demand and another which could see fresh downside. Remember though, my timeframe is just for the week ahead, Monday, November 11 – 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 top-line growth and provide an upbeat outlook thanks to robust growth across key metrics.
Shopify’s report is set for release Tuesday at 7:00 AM ET. Market participants expect a sizable swing in SHOP stock after the print drops, according to the options market, with a possible implied move of approximately 14% in either direction. Shares gapped up 26% after its last earnings report in August.
Source: InvestingPro
Analysts have raised profit forecasts 33 times in recent weeks, as per an InvestingPro survey, highlighting confidence in Shopify’s continued expansion.
Wall Street expects adjusted EPS to rise 14% to $0.27, while revenue is set to increase 23% to over $2.1 billion, driven by positive merchant growth and consistent demand for Shopify’s suite of software and payment tools.
Additionally, Shopify has a proven seasonal advantage: its stock tends to gain momentum leading up to Black Friday and Cyber Monday (NASDAQ:MNDY) (BFCM). Historically, shares have risen about 7% in the two weeks prior to BFCM from 2016 to 2023, showing resilience as demand spikes ahead of the holiday shopping season.
As more merchants capitalize on e-commerce for the holiday rush, Shopify remains well-positioned for upside.
SHOP stock ended at $87.12 on Friday, its highest closing price since February 12. Shares have gained 11.8% year-to-date. At current levels, the Ottawa, Canada-based e-commerce specialist has a market cap of $112.5 billion.
Source: Investing.com
As InvestingPro points out, Shopify sports a near perfect ‘Financial Health’ score of 4.0 out of 5.0 thanks to its favorable positioning in the software application industry, which has allowed it to leverage a resilient business model and strong profit growth.
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In contrast, Occidental Petroleum (NYSE:OXY) is facing 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 4:15PM ET on Tuesday. According to the options market, traders are pricing in a swing of around 6% in either direction for OXY stock following the print.
The energy sector’s current uncertainties make Occidental’s path to growth more complicated, with the company navigating 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 reducing 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 decrease comes amid volatile oil prices and ongoing debates around the global energy demand outlook.
Although Occidental has made moves to enhance its position within the sector, including recent strategic initiatives, near-term pressures continue to weigh on the stock. Consequently, the risk of underperformance appears higher as the company battles broader market uncertainties and industry-specific hurdles.
OXY stock closed at $50.53 on Friday, not far from a recent 52-week low of $49.51 touched on November 1. Shares are down 15.4% in 2024. At current valuations, the Houston, Texas-based company has a market cap of $47 billion.
Source: Investing.com
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF, and the Invesco QQQ Trust ETF. I am also long on the Technology Select Sector SPDR ETF (NYSE:XLK).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views 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 insight.
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