• CPI inflation, retail sales, producer prices and more profits will be in focus this week.
• Shopify stands out as a purchase, especially with the holidays just around the corner.
• Occidental Petroleum’s challenging landscape makes it a matter of caution.
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US stocks closed higher on Friday to cap their best week of the year, as the Dow Jones and S&P 500 rose to new records after Donald Trump’s decisive election victory.
Investors are betting that a Trump administration will provide lighter regulations and tax cuts that could boost the US economy.
For the week, the blue-chip Dow Jones Industrial Average rose 4.6%, the benchmark S&P 500 gained 4.7% and the tech-heavy Nasdaq Composite fell 5.7%.
Source: Investing.com
The coming week is expected to be an eventful one as investors assess the prospects for the economy, inflation, interest rates and corporate earnings.
On the economic calendar, the US consumer price inflation report for October will be the most important on Wednesday. The annual CPI is expected to rise by 2.4% year over year.
Other notable economic reports include U.S. retail sales data, as well as a producer prices report, which will help complete the inflation picture.
Source: Investing.com
That will be accompanied by a heavy list of Fed speakers, including Chairman Jerome Powell on Thursday.
Elsewhere, earnings season continues, with a list of notable names due soon 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 moves, below I highlight one stock that is likely to be in high demand and another that could see new downside. Please note, however, that my time frame is only for the upcoming week, Monday, November 11 through Friday, November 15.
Shopify stands out as a top buy this week, as the e-commerce software leader is expected to deliver another quarter of strong revenue growth and provide an optimistic outlook thanks to robust growth across key metrics.
Shopify’s report will be released Tuesday at 7:00 AM ET. Market participants expect a significant swing in SHOP stock after the price decline begins, with a possible implied move of about 14% in either direction, according to the options market. Shares rose 26% after its last earnings report in August.
Source: InvestingPro
Analysts have raised earnings forecasts 33 times in recent weeks, an InvestingPro survey found, underscoring confidence in Shopify’s continued expansion.
Wall Street expects adjusted earnings per share to rise 14% to $0.27, while revenue will rise 23% to over $2.1 billion, driven by positive merchant growth and consistent demand for Shopify’s software capabilities. and payment tools.
Plus, 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 leading up to the BFCM from 2016 to 2023, showing resilience as demand rises ahead of the holiday shopping season.
As more merchants turn to e-commerce for the holiday rush, Shopify remains well-positioned for upside potential.
SHOP stock closed Friday at $87.12, its highest closing price since Feb. 12. Shares are up 11.8% this year. At current levels, the Ottawa, Canada-based e-commerce specialist has a market capitalization of $112.5 billion.
As InvestingPro notes, Shopify has a near-perfect Financial Health score of 4.0 out of 5.0 thanks to its favorable positioning in the software applications industry, which has allowed the company to leverage a resilient business model and strong earnings growth.
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In contrast, Occidental Petroleum ( NYSE:OXY ) faces a more challenging outlook, putting it into heavy selling this week due to an unpredictable energy market and fluctuating oil prices.
The company is expected to release its third-quarter earnings report after the market closes at 4:15 PM ET on Tuesday. According to the options market, traders are pricing a swing of about 6% in either direction for OXY stock after the IPO.
Current uncertainties in the energy sector complicate Occidental’s path to growth, with the company navigating complex circumstances surrounding global demand and strategic shifts within the industry.
Source: InvestingPro
The oil and gas producer’s earnings outlook has deteriorated, with 16 of 17 analysts cutting their EPS estimates in recent weeks, reflecting a challenging market.
Earnings are expected to fall 36.4% year over year to $0.75 per share on revenue of $7.1 billion, down 4% year over year. This decline comes amid volatile oil prices and ongoing debates over the prospects for global energy demand.
While Occidental has taken steps to strengthen its position within the industry, including recent strategic initiatives, near-term pressures remain on the stock. As a result, the risk of underperformance appears greater as the company faces broader market uncertainties and sector-specific hurdles.
OXY stock closed at $50.53 on Friday, not far from its recent 52-week low of $49.51 on Nov. 1. Shares are down 15.4% in 2024. At current valuations, the Houston, Texas-based company has a market capitalization of $47 billion. .
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Revelation: As of this writing, I am long the S&P 500 and the Nasdaq 100 through the SPDR® S&P 500 ETF and the Invesco QQQ Trust ETF. I am also long the Technology Select Sector SPDR ETF (NYSE:XLK).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessments of both the macroeconomic environment and companies’ financial condition.
The views expressed in this article are solely the opinions of the author and should not be construed as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.
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