Welcome to Seeking Alpha’s Stocks to Watch – a preview of key events scheduled for the next week. Follow this account and turn the e-mail alert on to receive this article in your inbox every Saturday morning. A podcast of Stocks to Watch is also available on Sundays on Seeking Alpha, Apple Podcasts, Stitcher and Spotify (click the highlighted links).
A light week for corporate earnings will see more attention turn to economic data. Reports of interest include the PMI prints for July, wholesale inventories, the producer price index and another update on jobless claims. Bank of America expects jobless claims to be unchanged from last week at about 1.4M, although there is a warning that the claims number will look better than it actually is because of seasonal factors that don’t apply this year (automaker shutdowns). “We still expect NSA claims to rise as we anticipate initial claims will turn upwards in virus hotspot states as government officials reversed course on easing social distancing measures, causing many workers to go back to unemployment benefits,” updates BofA. It is a light week for Fedspeak, with just San Francisco Fed President Mary Daly and Richmond Fed President Thomas Barkin participating in a NABE talk on the economy. On the political agenda, a trilateral summit in Washington between President Trump, Mexican President Obrador and Canadian Prime Minister Trudeau is on tap. As for stocks, investors will continue to watch COVID-19 developments and start prepping for the Q2 earnings season. While U.S. heavyweights in the $1T market cap club like Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) might cruise along just fine, the spotlight on profits could burn brighter elsewhere with analysts forecasting earnings for S&P 500 companies to have dropped by 43.1% Y/Y.
Earnings spotlight: The thin calendar of earnings reports this week includes Paychex (NASDAQ:PAYX) and Levi Strauss (NYSE:LEVI) on July 7; Simply Good Foods (NASDAQ:SMPL) and Bed Bath & Beyond (NASDAQ:BBBY) on July 8; Walgreen Boots Alliance (NASDAQ:WBA) and Helen of Troy (NASDAQ:HELE) on July 9 and Shaw Communications (NYSE:SJR) on July 10.
Go deeper: See Seeking Alpha’s complete list of earnings reporters
IPO watch: Postmates (POSTM) could file for an initial public offering next week if the company decides market conditions are right. While no other IPOs are expected to price next week, things will get a little bit noisy for Vroom (NASDAQ:VRM) when the quiet period for the company’s IPO expires on July 6. Vroom closed on Friday at about 149% above where its IPO was priced, which could limit the price targets from analysts. Quiet periods also expire on July 7 for AZEK (NYSE:AZEK), Generation Bio (NASDAQ:GBIO), Avidity Bio (NASDAQ:RNA), Vaxcyte (NASDAQ:PCVX) and Burning Rock (NASDAQ:BNR).
Go deeper: Catch up on all the latest IPO news.
M&A tidbits: If Postmates doesn’t file for an IPO, the company could be the target of a special purpose acquisition company or attract a new offer from Uber (NYSE:UBER). Also next week, the walk date on the Cisco (NASDAQ:CSCO)-Acacia Communications (NASDAQ:ACIA) deal hits on July 7 and Standard Diversified (NYSEMKT:SDI) shareholders vote on the Turning Points Brands (NYSE:TPB) merger on July 9. Another event worth monitoring is the Nevada Gaming Control Board meeting on July 8 with discussion covering the Caesars Entertainment (NASDAQ:CZR)-Eldorado Resorts (NASDAQ:ERI) merger, as well as William Hill’s (OTCPK:WIMHY) application to take over the Caesars sportsbooks. Then in what has been a common item on the M&A watch list, shares of Tiffany could be bouncy as investors keep looking to read the tea leaves on the LVMH (OTCPK:LVMHF) buyout.
Projected dividend changes (quarterly): Cummins (NYSE:CMI) to $1.440 from $1.311, John B Sanfilippo (NASDAQ:JBSS) to $0.65 from $0.60 and a special cash dividend of $2.40, Walgreens Boots Alliance (WBA) to $0.4575 from $0.4550, Marsh & McLennan (NYSE:MMC) to $0.465 from $0.455 and Duke Energy (NYSE:DUK) to $0.956 from $0.945.
Mask math: Masks are now part of the investing matrix for analysts. Goldman Sachs sees upside as more Americans wear masks and more local governments institute rules. The firm points to data showing the high correlation in Europe and Asia of widespread mask usage through policy or cultural norms to fewer COVID-19 cases, hospitalizations and fatalities. GS estimates national face covering in the U.S. could prevent a 5% hit to national GDP. The goods news is that the percentage of people who say they “always” or “frequently” wear masks is on the rise. That could also be some more good news for Etsy (NASDAQ:ETSY), which has seen skyrocketing mask sales since April, and other retailers very active in the mask business like Old Navy (NYSE:GPS), Levi Strauss (LEVI) and Disney (NYSE:DIS).
Healthcare watch: The healthcare sector starts off Q3 with a light schedule next week. The Digital Novel Coronavirus Investment Forum on July 7 is described as a forward-looking analysis of the revolution in healthcare caused by the pandemic and the consequent exciting drive for innovation in the Life Sciences, HealthTech and Digital sectors. Companies due to present include Pluristem Therapeutics (NASDAQ:PSTI), Redhill Biopharma (NASDAQ:RDHL) and Immunic (NASDAQ:IMUX). BrainStorm Cell Therapeutics (NASDAQ:BCLI) is hosting a webinar on July 8 to discuss the company’s Alzheimer’s disease clinical program. On the FDA front, the action date for Endo International’s (NASDAQ:ENDP) marketing application for Xiaflex for buttocks cellulite is on the calendar, which could possibly impact Licensor BioSpecifics Technologies (NASDAQ:BSTC). A PDUFA date also arrives for Eagle Pharmaceuticals (NASDAQ:EGRX) on Ryanodex.
Business updates: The retail sector could get a jolt with June same-store sales reports due in from Costco (NASDAQ:COST) on July 8 and Buckle (NYSE:BKE) on July 9. Overall, retail sales are in an uptrend, but still have a long way to go to recapturing 2019 levels. Airline traffic reports will also start arriving next week and could include some updates on flight schedules and cash burn rates. The usual suspects to watch include JetBlue (NASDAQ:JBLU), Delta Air Lines (NYSE:DAL), United Airlines (NASDAQ:UAL), American Airlines Group (NASDAQ:AAL), Southwest Airlines (NYSE:LUV), Hawaiian Holdings (NASDAQ:HA), Alaska Air Group (NYSE:ALK), Allegiant Travel (NASDAQ:ALGT), Spirit Airlines (NYSE:SAVE), Mesa Air Group (NASDAQ:MESA) and SkyWest (NASDAQ:SKYW).
Conferences rundown: The TD Securities Energy Conference on July 7 features virtual presentations from Kimball Royalty Partners (NYSE:KRP), Baytex Energy (NYSE:BTE), Inter Pipeline (OTCPK:IPPLF) and Keyera (OTCPK:KEYUF). The CBD Biopharma Investor Conference on July 9 is scheduled to include virtual presentations from Avicanna (OTCQX:AVCNF), Cardiol Therapeutics (OTCQX:CRTPF), MediPharm Labs (OTCQX:MEDIF), Willow Biosciences (OTC:CANSF) and Marijuana Company of America (OTCQB:MCOA). Also on the calendar next week, Arco Dorados (NYSE:ARCO) is due to present at the Bradesco BBI Virtual LatAm Consumer Forum and Nvidia (NASDAQ:NVDA) will give a talk at the Piper Sandler’s “It’s Friday: State of Cloud” Virtual Event 2020.
Cannabis: The cannabis sector continues to ride through the pandemic and keep growing. For the second half of June, more than 52 new cannabis stores were opened across Canada. Despite the COVID-19 disruption, U.S. industry revenue is still on pace to grow by 33% to $16.5B this year with the industry classified as an essential service. Looking ahead, analysts say they are watching the impacts from higher levels of structural unemployment, expiration of unemployment assistance and if additional federal direct stimulus payments will be made. Top picks from Wells Fargo in the sector are Green Thumb Industries (OTCQX:GTBIF), Trulieve Cannabis (OTCQX:TCNNF) and Curaleaf Holdings (OTCPK:CURLF).
Tesla: As the world’s most valuable automaker, Tesla (NASDAQ:TSLA) will be the focus of investor debate just as much as ever with shares on a 166% 90-day sprint higher. Morgan Stanley notes that if the automaker posts anything close to a break-even Q2, that it will stand out dramatically from the billions of dollars in monthly cash burn being reported out of Detroit from Ford (NYSE:F) and General Motors (NYSE:GM). Looking down the road, the firm expects Tesla (TSLA) to deliver 433K vehicles for the full year, with deliveries of over 500K called its bull case scenario. Speaking of bull case scenarios, Wedbush Securities rides into next week with a fresh bull case PT of $2000 on Tesla. “We continue to believe EV demand in China is starting to accelerate with Tesla competing with a number of domestic and international competitors for market share with Giga 3 remaining the linchpin of success,” updates analyst Dan Ives. Tesla traded as high as $1,228 last week.
Volatility watch: Stock with a high level of short interest heading into next week include GameStop (NYSE:GME), Waitr Holdings (NASDAQ:WTRH), Stitch Fix (NASDAQ:SFIX), Luckin Coffee (NASDAQ:LK) and National Beverage (NASDAQ:FIZZ). Some of the sharp movers on the Robinhood platform include EV-related names Plug Power (NASDAQ:PLUG), Workhorse Group (NASDAQ:WKHS), Electrameccanica Vehicles (NASDAQ:SOLO) and Nio (Nio), while pharma giant Pfizer (NYSE:PFE) is also drawing a lot of interest on vaccine hopes. Finally, some tech-related stocks with a multi-billion dollar market caps and outsized first-half gains could see some valuation checks from investors. Top tech-related gainers for the year include Fastly (NYSE:FSLY) +321%, Zoom Video (NASDAQ:ZM) +273%, DraftKings (NASDAQ:DKNG) +211%, Livongo Health (NASDAQ:LVGO) +200%, Etsy (ETSY) +140%, Shopify (NYSE:SHOP) +139%, Bill.com (NYSE:BILL)+ 137%, Zscaler (NASDAQ:ZS) +135% DocuSign (NASDAQ:DOCU) +132% and Datadog (NASDAQ:DDOG) +130%.
Barron’s mentions: The cover story outlines the bull case and bear case for the stock market amid the pandemic, while also laying the most likely scenario. The base case predicts the coronavirus is something Americans will have to live with for an extended period and predicts the Federal Reserve will continue to do whatever it takes to support the economy and financial markets. Congress is also seen passing additional aid to households and businesses of at least $1T, while the stock market is seen heading sideways as social distancing rules remain strict and reopenings stop and start. The publication also takes a hard look at the turnaround potential for three stocks hit hard by COVID-19 concerns. Sally Beauty Holdings (NYSE:SBH), Michaels (NASDAQ:MIK) and Blackbaud (NASDAQ:BLKB) are seen potentially surging when things start going “right” in the economy. Chipotle (NYSE:CMG) and Wingstop (NASDAQ:WING) are also given some respect for their sector-leading pandemic performances. The takeout/delivery superstars are expected to keep nabbing market share as their pandemic-proof models continue to impress.
Sources: Bloomberg, Recode, Automotive News, Reuters, CNBC, EDGAR
Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.