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Sunday Watchlist

Week of October 21, 2019

After months of trade war issues, recession fears, impeachment talk, and interest rate cuts, we’ll finally see how these issues affected companies’ bottom lines.

And so far, it looks like many did very well.

Banks for example had strong results, reflecting a healthy U.S. consumer.  JP Morgan reported revenue and earnings that were up more than expected thanks to its consumer banking division.  Wells Fargo pushed higher after a surprise jump in revenue. Bank of America beat third quarter profit and revenue estimates thanks to its consumer and advisory business.  

UnitedHealth Group Inc. not only beat on earnings and revenue, but also raised its full-year outlook.  Even Netflix knocked earnings out of the park with EPS of $1.47, as compared to expectations for $1.04 on revenue of $5.24 billion.

Markets are also looking forward to Facebook earnings due on October 30, 2019.  

Analysts at Rosenblatt Securities believe investors should buy the stock ahead of earnings, citing “strong underlying demand.”  The firm maintained its buy rating with a $242 price target.

Amazon will report earnings on October 26, 2019. 

Jefferies’ analysts are warning investors not to buy Amazon on weakness ahead of earnings, noting, “Q4 consensus operating income may prove to be a stretch” and “could weigh on AMZN shares if guidance once again falls short of street numbers.”

As we wait for more earnings reports, here are the top stocks piquing our interest.

Opportunity No. 1

Canopy Growth (CGC)

While all seems lost here, analysts remain bullish on the stock long-term.  In fact, Piper Jaffray noted, “We continue to estimate a $250-500B potential long-term global cannabis market, with a $15-50B near-term opportunity, and believe Canopy is well positioned in the sector, particularly with $2.3B in cash in an industry recently facing growing difficulty raising capital.”

Opportunity No. 2

TD Ameritrade Holding Corporation (AMTD)

Online brokerage stocks are aggressively oversold.  All after Charles Schwab said it would cut all commissions for stock trading, ETFs and options on its mobile and web platforms. While the news was devastating initially, it’s now overdone. The story is out.  The fear appears to be priced in. Greed may soon replace the excessive, ridiculous fear.

Opportunity No. 3

Stitch Fix Inc. (SFIX)

SFIX is just beginning to pivot higher from double bottom support dating back to early 2019.  Plus, we’re seeing some healthy insider buying. In fact, company director John Gurley just spent $3.1 million on the stock with an average price of $20.83 a share.  In addition, SunTrust Robinson is maintaining its buy rating on the stock with a price target of $36 a share, citing “material market share gains, product innovation, positive payback on ad spend, and growing operating efficiencies.”