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A blockbuster week ahead includes the FOMC meeting, a key OPEC gathering, and a flurry of heavyweight earnings reports. The Federal Reserve is largely anticipated to fire off a 25-point rate hike to take the target federal funds rate to 4.50% to 4.75%. The consensus view is that the Fed will continue with its tightening policy and signal more rate hikes are still in the mix. Seeking Alpha author Bill Conerly said in his Fed preview article that the transitory elements of inflation have come down, but the underlying problem of excessive stimulus remains. OPEC oil ministers will meet online during the week to review levels of output. The Joint Ministerial Monitoring Committee of OPEC+ is expected to endorse the current oil output policy of the group. Also on the macroeconomic calendar, the unemployment report at the end of the week is expected to show a rise in nonfarm payrolls of 225K with the end of a strike by University of California workers in late December a positive factor. Private payrolls are forecast to rise by 200K following a 220k increase in December. Bank of America thinks behind the strong payroll print, some details will show cracks in the foundation, particularly in manufacturing. The heavy earnings slate includes reports from tech heavyweights Amazon (AMZN), Apple (AAPL), Alphabet (GOOG), and Meta Platforms (META). Investors are looking to see the focus return back to growth after recession worries, high-profile job layoffs and supply chain snarls dented sentiment. Other big reports include the quarterly updates from Exxon Mobil (XOM), Starbucks (SBUX), and Merck (MRK). The loaded earnings week has Seeking Alpha authors busy with specific stock recommendations. Victor Dergunov weighed in on META, saying once the company gets beyond the transitory slowdown, this is the social media stock to own. Edmund Ingham was cautious Merck’s (MRK) this year with lots of headwinds in the mix. Meanwhile, The Outsider is bullish on the future of Qualcomm (QCOM) ahead of the wireless tech player’s earnings report.
Earnings spotlight: Monday, January 30 – NXP Semiconductors (NXPI) and Whirlpool (NYSE:WHR).
Earnings spotlight: Tuesday, January 31 – Exxon Mobil (XOM), General Motors (GM), UPS (UPS), Pfizer (PFE), Caterpillar (CAT), McDonald’s (MCD), Amgen (AMGN), AMD (AMD), Electronic Arts (EA), and UBS (UBS)
Earnings spotlight: Wednesday, February 1 – AmerisourceBergen (ABC), Altria (MO), Peloton Interactive (PTON), and Meta Platforms (META).
Earnings spotlight: Thursday, February 2 – ConocoPhillips (COP), Merck (MRK), Eli Lilly (LLY), Amazon (AMZN), Apple (AAPL), Alphabet (GOOG), Starbucks (SBUX), Ford Motor (F), and Qualcomm (QCOM).
Earnings spotlight: Friday, February 3 – Cigna (NYSE:CI), Regeneron Pharmaceuticals (REGN), and Church & Dwight (NYSE:CHD).
Volatility watch: Upstart Holdings (UPST) and Root (ROOT) are positioned for a volatile week with short interest at a very high level. Opendoor Technologies (OPEN) is on the list of stocks with the highest implied volatility based on options trading. Bed Bath & Beyond (NASDAQ:BBBY) is still a highly-shorted battleground stock even as bankruptcy odds increase.
IPO watch: E-bike maker Sondors (NASDAQ:SODR) and medical device maker Neuraxis (NRXS) are expected to start trading next week after pricing their IPOs. The IPO lockup period expires for blocks of shares of Vinci Partners Investments (NASDAQ:VINP) on January 30 and Magic Empire (NASDAQ:MEGL) on February 1.
Dividend watch: Some of the notable companies expected to boost their dividend payouts next week include Old Dominion (ODFL) to $0.40 from $0.30, Bath & Body Works (NYSE:BBWI) to $0.25 from $0.20, Invitation Homes (NYSE:INVH) to $0.27 to $0.22, and Exponent (EXPO) to $0.27 from $0.24. Also in the dividend world, there could be some attention on Nordson (NASDAQ:NDSN), C.H. Robinson Worldwide (NASDAQ:CHRW), and J.M. Smucker (SJM) with the three stocks being added to S&P 500 Dividend Aristocrats Index on February 1 The index is made up of stocks in the broader S&P 500 index that have increased their dividends in each of the past 25 years at least. Nordson, which joined the S&P 500 last year, has actually had 42 straight years of dividend raises. The highest yielding stocks on the S&P 500 Index are V.F. Corporation (VFC) 6.8%, International Paper (NYSE:IP) 5.1% and Ford Motor (F) 4.7%. The highest yielding stocks on the Dow Jones Industrial Average are Verizon (VZ) 6.48%, Walgreens Boots Alliance (WBA) 5.26%, and 3M (MMM) 5.25%.
Corporate events: Matinas BioPharma (NYSE:MTNB) will hold a corporate update call on January 30. Shareholders with Lionheart III Corp (NASDAQ:LION) will vote on January 31 on taking sustainable supply chain player Security Matters public in a SPAC deal. Samsung (OTCPK:SSNLF) will hold its Unpacked product event on February 1. The company is expected to announce the S23 series of phones at its first in-person event in three years. Arcos Dorados Holdings (NYSE:ARCO) will host its 2023 investor update event on February 2. A webcast will feature presentations by members of the senior management team on earnings results, long-term goals, and will include an update on the 3D’s Strategy (Digital, Delivery and Drive-thru). On February 3, Church & Dwight (CHD) will hold an analyst day event with a strategy and longer-term guidance update. Check out Seeking Alpha’s Catalyst Watch for more events scheduled for next week.
U.S. auto sales preview: New vehicle sales in January are forecast by Cox Automotive to show a surprising gain when announced next week. Light new-vehicle sales are expected to rise 2.7% from a year ago, but fall 19.8% from last month. The research firm expects the seasonally adjusted annual rate to finish near 15.6M, a large increase from the 13.3M pace seen in December. “As we start 2023, high interest rates continue to hold back the new-vehicle market, while some concerns with inventory supply appear to be falling away,” noted Cox economist Charlie Chesbrough. Inventories are said to be improving, although some Asian brands continue to have extremely limited availability. TrueCar forecasts a 16M unit SAAR pace for the month and sees average transaction prices falling 2% from December. Automakers expected to post big gains in January include BMW (OTCPK:BMWYY), General Motors (GM), Honda (HMC), and Tesla (TSLA) – while Stellantis (STLA) and Toyota (TM) are seen giving up market share for the month. S&P Global Mobility forecast battery electric vehicle share is expected to reach 7.4% in January to mark an all-time record high mix level. Tesla’s (TSLA) downward price adjustments are said to be a notable factor. “While this is the first shot in a BEV price war, the reaction of other auto companies will determine whether the January mix level will be a blip in the trend or a dynamic tipping point in the electrification progress of the market,” noted S&P.
Notable conferences: The conference schedule is light, with only the Lytham Partners Investor Select Conference and Sequire Biotechnology Conference standing out.
Barron’s mentions: Lowe’s (LOW) landed a surprise callout this weekend amid growing concerns on the housing market and the impact of a potential recession in the U.S. The publication pointed out that the home improvement retailer has a plan to minimize the damage by cutting advertising expenses and delaying some longer-term projects. By Barron’s calculations, even if sales drop to $87B for Lowe’s this year in a worst-case scenario, margins would come in at 13.3% vs. 12.9% in 2022. EPS is seen being on a reasonable path to $20 a year by 2026 to represent roughly 10% compound annual growth rate from last year’s mark. The main takeaway is that the current share prices offer long-term investors a compelling entry point with the stock trading at a discount to both rival Home Depot and the S&P 500 index.
Sources: EDGAR, Bloomberg, CNBC, Reuters
Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
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