Another week of big earnings is upon us. From major tech names like Apple (AAPL) , to biotech and pharmaceutical companies like Gilead Sciences (GILD) , to overpriced cooler companies like Yeti Holdings (YETI) , here are some big names to keep an eye on this week.
Apple (Reports Tuesday)
Apple has been having trouble finding a strong second act to follow up the iPhone money train. Through the first six months of the fiscal year, Apple's revenues were down 4.7%. Since then, we really haven't seen much in the way of new avenues of growth. Forecasts are predicting pretty flat sales year-over-year for the fiscal third quarter, and it doesn't seem like we're going to get much excitement out the company's earnings this week. Sentiment doesn't seem to be all that strong for the fiscal year as a whole either; and I'll be curious to see what guidance is provided this week.
Gilead Sciences (Tuesday)
Gilead Sciences has had a rough time through the last 18 months in terms of sales. With the progressive slowdown of its hepatitis drugs, Gilead has been forced to make do with much smaller revenue streams relative to a few years ago. This year, it seems we've seen a leveling out of the declines. Drugs for things like HIV are the main sources of revenue now, and I feel GILD is a stock worth looking at. If it can report another quarter with stable overall sales, I'll definitely be considering a position. I may even trade GILD in the coming week
General Electric (Wednesday)
What can be said? General Electric (GE) has seen better days. With meaningful earnings pretty much a fool's errand, what can drive this stock? For those who want to take a swing on GE, it's going to be about cost cutting. What sorts of initiatives can the company show that are going to lead back to a thriving business? That's what will give GE some momentum. Cash flow will be a big deal, and developments on future areas of growth will be a major focus.
Encana Corporation (Wednesday)
Encana (ECA) finished its acquisition of Newfield Exploration in the beginning of the year, and became a major holder of oil and gas reserves in the United States. Of course, the acquisition came at quite a price, and investors were none too happy about the $5.5 billion spent on the deal. The announcement also had some pretty poor timing, as it coincided with the beginning of the winter correction in the stock market. Oil prices also took a steep dive. Subsequently, ECA stock really tumbled. Now, Encana is working to prove the merits of its investment. Oil prices have recovered somewhat, and it should be interesting to see where things stand with the additional production from the deal.
Fiat Chrysler (Wednesday)
Fiat Chrysler (FCAU) has had some good things happening in terms of Ram truck and Jeep sales. That said, car stocks are not exactly my favorite thing right now. Momentum is not on the side of this auto cycle, and I'm cautious on owning automakers. Yes, the dividends are strong, but carmakers are one of the first industries to suffer during times of economic slowing. After 10 years of boom, we see chatter every week about when the next recession may begin. FCAU may be a trade here on good news, but I'd urge caution on the long term. The years 2007-2009 should serve as a strong lesson on car stocks.
Aphria (Thursday)
Aphria (APHA) is a name that I owned for a long time. I've traded it off and on, and still think the long-term potential is there. I gave up my position because of the losses incurred by other names like Canopy Growth (CGC) . Market momentum is not on its side, as the expenses of production scaling seem to be much bigger than many anticipated. Since the road to profits seems a bit longer, I've moved capital to other areas for the time being.
Because of the drama surrounding various accusations and executive changes at the company, I worry that reported losses that exceed estimates might punish the stock hard. I will be paying close attention to sales. Is this company growing at the same rate as its competitors? Will the sales volumes pave the path to profits later in the year? Or will we have to wait until 2020?
Dunkin' Brands (Thursday)
I always describe Dunkin' Brands (DNKN) as the company that can't have a bad quarter. What I mean by that is its balance sheet is so weak that this stock's success is predicated on strong earnings growth. At the end of their last quarter, Dunkin' Brands had total equity deficit of $691 million. While it has progressed in improving the balance sheet through the past five quarters, long-term debt is actually increasing. When you look at the balance sheet relative to the market capital of the stock, I don't see the appeal. Dunkin' has to produce earnings growth, or the stock has very little support.
Yeti Holdings (Thursday)
Since going public, Yeti Holdings has had quite a run. More than doubling in value since October, Yeti has a lot to prove in terms of earnings. Analyst estimates have the juggernaut of high quality coolers delivering earnings of $1.06 per share for the full year. If that's the case, this stock is charging quite a premium. At $35.88 a share, this stock trades at more than 33-times forward-full year earnings estimates. Not exactly a cheap price for an industry with a lot of substitute goods.
Apple is a holding in Jim Cramer's Action Alerts PLUS member club.
