Relax. I know, I say this as the stock market struggles to decide whether it likes the prospect of lower interest rates, as the confusion continues over Brexit, as the trade war between the U.S. and China boils on, and as an election approaches that may very well have a "corporate weary" democratic candidate.
But, instead of fretting over those issues, you should streamline your approach and get back to the fundamentals: Focus on the actual performance of the businesses. These are the names that I'll be watching.
Nike (NKE) has provided stable revenue growth annually. While always profitable, Nike has seen a bit more volatility on the income side of things. Nonetheless, the juggernaut remains the king of sports apparel. Nike has been working hard on pressing its direct-to-consumer initiatives. Indeed, "NIKE direct" is the fastest growing portion of the business. In fiscal 2019, sales to wholesalers grew 6% last year, while Nike direct sales increased 13% to $11.75 billion. For all intents and purposes, I think much of the focus moving forward will be on this segment. Many retailers have been struggling. That's no secret. And Nike may very well do better by taking the time to move its products itself, effectively cutting out the middle man. My question moving forward will be what long-term impact this has on margins.
Having suffered massive fallouts in revenue over the years, Blackberry (BB) has been recreating itself as a software company. A few quarters ago, we saw a surprisingly positive shift as a result of this focus on security software. With a few quarters of profitability, investors began to wonder whether Blackberry was really pulling it off. With actual equity on the balance sheet, and some growing relationships with automakers revolving around software integration, Blackberry might actually be onto something. I'm certainly not buying the shares, but there might be potential here.
Micron (MU) has certainly a bit over chip-demand concerns, as well as the trade disputes with China. Overall, I really tend to not like tech or hardware companies. But the manner at which Micron shares have outpaced the S&P 500 over the past three years is impressive. The stock has recovered much of its pullback from last year, and is currently outpacing the market yet again.
With tensions so high over trade and manufacturing, Micron is trading at a very low valuation relative to earnings. I think investors are going to be very reactive to signs of true weakness. If earnings falter, the stock will likely follow. If we see an earnings beat, Micron could have some fireworks next week.
The fiscal third quarter is historically the big one for Carnival (CCL) . What better time to take a cruise than when the weather is at its finest? Carnival Corporation started out its fiscal year with two earnings beats. Going into next week, shareholders will be looking for something that can reignite this stock. CCL shares have underperformed the market by about 20% over the past six months. Overall, I'm not sure I'm too hot on Carnival. While an earnings beat certainly sounds plausible based on past performance, current movements in fuel prices don't really work in a cruise line's favor. Moreover, consumer demand for cruise ships probably won't remain that strong if we do finally see that recession everyone keeps trying to predict.