Stocks on Wall Street ended up mixed on Friday, but the main averages still managed to score a winning week as the market shifted its focus to the start of the fourth quarter earnings season.
It posted a weekly gain of 4.2% to finish on another record high, boosted by a rally in mega-cap tech stocks. The and the, meanwhile, tacked on 1.9% and 0.6% respectively in the same period.
Amid a long string of high-profile earnings reports, a Federal Reserve and important economic data, next week is expected to be a busy week on Wall Street.
Regardless of which direction the market is heading, below we highlight one stock that is likely to be in high demand in the coming days and another stock that could suffer further losses
However, keep in mind that our timetable is for the next week only.
Stocks to Buy: Microsoft
Microsoft (NASDAQ 🙂 will take center stage this week as investors await the latest financial results from the Redmond, Washington-based tech giant, which is scheduled to report revenues on Tuesday, Jan. 26, after the closing bell.
It has reports or matched Wall Street estimates for 14 dating back to the first quarter of 2017.
Consensus expectations call for earnings per share (EPS) of $ 1.64 for the second fiscal quarter, up nearly 9% from earnings per share of $ 1.51 in the same period one year ago. Revenues are also expected to grow approximately 9% year-over-year to $ 40.2 billion, reflecting strong demand for its cloud computing products.
In addition to the top and bottom line numbers, market participants will pay close attention to how quickly Microsoft's thriving Intelligent Cloud business continues to grow. This segment includes Azure, GitHub, SQL Server, Windows Server and other business services.
Another important metric that we are focusing on is how well Microsoft's Productivity and Business Processes segment performed. The main unit includes the Office 365 cloud productivity suite, Dynamics products and cloud services, Teams communications app, and LinkedIn.
MSFT shares closed at $ 225.95 on Friday, not far from their all-time high of $ 232.86 on September 2. The company saw its stock growth around 35.5% in the past 12 months, easily outperforming the S&P 500's 15.5% increase over the same time frame.
With a market capitalization of $ 1.71 trillion, Microsoft is the second most valuable company in the world, with only Apple (NASDAQ 🙂 behind it.
Mapping techniques also look promising. They suggest that MSFT appears poised to break out of its recent trading range. The shares are back above the 50-day and 100-day moving averages, which usually indicates more gains in the short term.
Stock To Dump: American Airlines
American Airlines (NASDAQ 🙂 stock will come under pressure in the next week as investors position themselves for earnings reporting of the Fort Worth, Texas-based airline.
American – which reported a sharp year-on-year decline in revenues and revenues for the past quarter – then reports financial results ahead of the opening Thursday, Jan. 28.
Consensus estimates call for a loss per share of $ 4.11 for the fourth quarter, compared to earnings of $ 1.15 per share in the same quarter a year earlier.
Meanwhile, revenues are predicted to drop by nearly 65% ??from the same period last year to $ 3.89 billion, highlighting the airline's ongoing struggles due to the sharp drop in air traffic during the coronavirus pandemic.
Aside from earnings per share and revenues, investors will keep an eye on the carrier's update on its daily cash burn, which totaled $ 44 million in the third quarter.
More importantly, market players will also focus on the company's guidelines regarding outlook for the rest of the year and beyond, amid the unprecedented nature of the ongoing COVID-19 pandemic on travel trends.
AAL stock, which fell to an all-time low of $ 8.26 on May 14 and fell more than 45% in the last 12 months, closed at $ 15.82 on Friday, giving it a market cap of about $ 10 billion .
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At current estimates, American is the fourth largest US airline behind Southwest Airlines (NYSE :), Delta Air Lines (NYSE 🙂 and United Airlines (NASDAQ :).
