The Week Ahead: Keep Your Investor Hat On

 | Jun 29, 2014 | 8:00 PM EDT  | Comments
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Stock quotes in this article:

ppc

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cag

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krft

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bud

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tap

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sam

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ko

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pep

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lnce

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unfi

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gbx

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stz

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arii

This coming trading week, of course, will be a shortened one due to the Fourth of July holiday. Be sure to enjoy it with your family, friends and loved ones, but also keep your investor eye on what's being served at all those barbecues.

For myself, my bet is on more chicken and hot dogs, which will be good for Pilgrim's Pride (PPC) and ConAgra (CAG) shares, given the rise in beef prices. If you do spot bacon cheeseburgers, think Kraft Foods (KRFT). You may see more alcoholic beverages, such those made by Anheuser-Busch (BUD), Molson Coors (TAP) or Boston Beer (SAM), maker of Sam Adams. Or more family-friendly brands could be prevalent, such as Coca-Cola (KO) and PepsiCo (PEP). Furthermore, will you see more of Pepsico's Frito-Lay chips or Lance's (LNCE) Snyder's, or are store brands more popular? If you see more organic and gluten-free products on the table, meanwhile, that could be a positive for United Natural Foods (UNFI).

It sounds like a small thing, but it's these anecdotal data points that can round out an investment thesis or possibly shine a new light on something new.

Ahead of that, however, the week ahead will offer a smattering of economic data in the space of just four sessions, and the June employment report is due out Thursday -- so that may perk up trading despite the holiday. That said, I expect volume to drop significantly as money managers and traders leave early for the holiday weekend. Low-volume days like these call for cautious trading.

Tuesday will be the big day for data, proffering a number of final purchasing managers indices from Markit Economics. Remember, last week's flash PMIs were generally favorable for the U.S. and China, and the eurozone saw another round of slowing growth. The one commonality across the board was higher input prices, and I will be watching that closely in these final readings.

Tuesday also brings the June manufacturing report from the Institute for Supply Management, which should be positive. The employment component will be key here, as it will shed some light on what we can expect from Thursday's jobs number. Not to sound like a broken radio, but those PMI and ISM reports should be positive for companies such as Eaton (ETN), Paccar (PCAR), Parker Hannifin (PH), General Electric (GE) and Honeywell (HON).

May construction spending and June auto-and-truck sales data are also due out Tuesday. I continue to favor Jacob Engineering (JEC): The Thematic Growth Portfolio is long that stock, as well as PowerShares Dynamic Building & Construction (PKB). The portfolio is also long General Motors (GM), and we continue to favor its operating leverage, in addition to its likely future shares gains.

More broadly, Polk should soon issue its annual analysis of the age of passenger cars and truck fleets. Despite the strong auto sales that have benefitted GM, Ford (F), Chrysler, Volkswagen, Honda (HMC) and Tesla Motors (TSLA), among others, odds are that we will not see a significant drop in the average age. That suggests we will continue to see robust auto and truck demand as consumers continue to replace older vehicles with newer, more mileage-friendly ones.

Wednesday brings the ADP employment report, in addition to the job-cuts report from Challenger Gray. In the rear-view-mirror category, May factory-orders data hit on Wednesday and we'll close the week with the aforementioned June employment report and ISM services index.

As for the Thursday jobs number from the Labor Department, current expectations -- which will undoubtedly be revised with the ISM manufacturing data and ADP jobs reports -- call for the creation of 210,000 to 215,000 additional jobs. The unemployment rate is expected to hold steady at 6.3%. Of course, the internals of the employment report -- hours worked, average hourly wages and the mix of jobs created during the month -- will provide far more insight, in my opinion.

On the earnings front, this week constitutes the calm before the storm. Only a handful of noteworthy companies are set to report, among them Greenbrier Cos. (GBX) and Constellation Brands (STZ).

Given the year-over-year strength in rail and intermodal traffic, and the sharp rise in rail-leasing rates, Greenbrier's commentary on railcar industry trends will provide important clues. At the Thematic Growth Portfolio, we continue to favor shares of American Railcar (ARII), given its greater exposure to tanker and other car types. As for Constellation, the wine, whiskey and vodka business at this company has delivered better-than-expected earnings over the last few quarters. It will be worth listening to management's outlook for the seasonally strong second half.

Following is a more detailed look at what you can expect over the next several trading days. Be sure to check back midweek for the Corner of Wall & Main, in which Lenore Hawkins and I dish on the first half of the trading week and other key matters and thoughts -- as well as how to play it all.

Again, be sure to enjoy the Fourth and keep your investor eyes open wide.

_________________

Economic Calendar

Monday, June 30

  • Chicago Purchasing Managers Index (PMI) (June)
  • Pending Home Sales (May)

____

Tuesday, July 1

  • Markit/Japan Materials Management Association (JMMA) Japan Manufacturing PMI              
  • HSBC China Manufacturing PMI  
  • Markit Eurozone Manufacturing PMI        
  • Markit U.S. Manufacturing PMI  
  • HSBC Mexico Manufacturing PMI              
  • J.P. Morgan Global Manufacturing PMI
  • Institute for Supply Management (ISM) Manufacturing Index (June)
  • Construction Spending (May)
  • Auto and Truck Sales (June)

____

Wednesday, July 2

  • Mortgage Bankers Association (MBA) Mortgage Index (Weekly)
  • Challenger Job Cuts (June)
  • ADP Employment Change Report (June)
  • Factory Orders (May)
  • Crude Oil Inventories (Weekly)

____

Thursday, July 3

  • Employment Report (June)
  • Trade Balance (May)
  • ISM Services (June)
  • Natural Gas Inventories (Weekly)

____

Friday, July 4

  • U.S. Stock Market Closed -- July 4 Holiday

_________________

Earnings Calendar

Monday, June 30

  • Advanced Photonix (API)
  • Mandalay Digital (MNDL)

____

Tuesday, July 1

  • Acuity Brands (AYI)
  • Franklin Covey (FC)
  • Park Electrochemical (PKE)

____

Wednesday, July 2

  • Greenbrier Companies (GBX)
  • Paychex Inc. (PAYZ)
  • Constellation Brands (STZ)

____

Thursday, July 3

  • International Speedway (ISCA)

____

Friday, July 4

  • U.S. Stock Market Closed -- July 4 Holiday

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