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1 Stock To Buy, 1 To Dump When Markets Open: Microsoft, Clorox

By Investing.com (Jesse Cohen/Investing.com)Stock MarketsOct 31, 2021 07:15AM ET
www.investing.com/analysis/1-stock-to-buy-1-to-dump-when-markets-open-microsoft-clorox-200606876
1 Stock To Buy, 1 To Dump When Markets Open: Microsoft, Clorox
By Investing.com (Jesse Cohen/Investing.com)   |  Oct 31, 2021 07:15AM ET
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Stocks on Wall Street ended higher on Friday, with the benchmark S&P 500 closing at a new record peak amid optimism over the ongoing corporate earnings season.

S&P 500 Daily Chart
S&P 500 Daily Chart

The week ahead is expected to be a busy one with another batch of notable earnings reports scheduled for release from companies like Roku (NASDAQ:ROKU), Square (NYSE:SQ), Coinbase Global (NASDAQ:COIN), Uber (NYSE:UBER), Pfizer (NYSE:PFE), and Moderna (NASDAQ:MRNA).

In addition to earnings, there is also a key Federal Reserve monetary policy meeting this week, as well as important economic data, including the latest U.S. employment report.

Regardless of which direction the market goes however, below we highlight one stock likely to be in demand and another which could see further downside. 

Remember though, our timeframe is just for the upcoming week.

Stock To Buy: Microsoft 

Microsoft—which dethroned Apple (NASDAQ:AAPL) last week as the world’s most valuable company—will be in focus in the days ahead as it holds its second annual ‘Ignite’ digital event. The three-day conference kicks off on Tuesday, Nov. 2 and will be live-streamed on Microsoft's (NASDAQ:MSFT) website, starting at 11:00AM ET, when Chief Executive Officer Satya Nadella is due to deliver his highly anticipated keynote speech.

According to Microsoft, Nadella will talk about “emerging technology trends and innovations across the Microsoft Cloud that will transform every business and industry going forward,” as the economy undergoes a sea change of digitization.

In addition to Nadella, other members of Microsoft’s leadership team are expected to reveal fresh details on the tech behemoth’s new products and features, with most of the focus on the Windows 11 operating system. The online event will also include sessions on Microsoft Azure, Teams, and several other Microsoft services.

MSFT Daily Chart
MSFT Daily Chart

MSFT stock ended at a new all-time high of $331.62 on Friday. With a market cap of $2.49 trillion, right now, Microsoft is the most valuable company listed on the U.S. stock exchange.

The Redmond, Washington-based tech titan has seen its stock gain roughly 49% since the start of the year, benefitting from robust demand for its cloud-based offerings. Investor sentiment was lifted further last week, when Microsoft reported blowout profit and booming revenue growth for its fiscal first quarter, thanks once again to strong demand for its cloud-computing services.

Earnings jumped nearly 25% from the year-ago period to $2.27 per share, while revenue soared 22% to a record $45.3 billion to record its fastest growth in sales since 2018.

Stock To Dump: Clorox 

Shares of Clorox (NYSE:CLX) are expected to suffer a volatile week as investors brace for disappointing financial results from one of America’s most well-known household products maker.

Consensus expectations call for the consumer products giant—which was one of the big pandemic winners of 2020—to post earnings per share of $1.03 when it reports fiscal first-quarter numbers after the U.S. market close on Monday, Nov. 1, tumbling about 68% from EPS of $3.22 in the year-ago period.

Revenue, meanwhile, is forecast to fall around 11.5% year-over-year to $1.70 billion, as receding fears surrounding the COVID health crisis reduced demand for pandemic-era essentials, such as hand sanitizer, cleaning wipes, and other disinfectant products.

Clorox’s bleach and disinfectant wipes account for approximately 25% of its sales. Perhaps even more important, Clorox’s Cleaning segment, which includes these products—as well as other brands such as Pine-Sol and Green Works—generates 53% of Clorox’s overall earnings.

Beyond the top-and-bottom line numbers, Clorox’s update regarding its outlook for the rest of the year and beyond will be in focus as it deals with the negative impact of higher commodity costs and supply chain issues, possibly hurting margins.

When the company reported fiscal Q4 earnings on Aug. 3, it warned that raw material inflation and rising manufacturing and logistics costs, most notably in transportation, will weigh on its full-year performance.  

Investors sold the stock in response, sending shares down by almost 10%.

CLX Daily Chart
CLX Daily Chart

CLX stock, which fell to its lowest level since February 2020 at $156.23 on Oct. 19, closed Friday’s session at $163.01. At current levels, the Oakland, California-based company has a market cap of roughly $20 billion.

Clorox has seen its shares steadily drop to new lows in recent weeks even as the broader market rebounds from its recent bout of volatility to scale new record highs. Year-to-date, CLX shares have lost 19.2%, compared to the S&P 500’s 22.6% gain over the same timeframe.

1 Stock To Buy, 1 To Dump When Markets Open: Microsoft, Clorox
 

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1 Stock To Buy, 1 To Dump When Markets Open: Microsoft, Clorox

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Comments (10)
DEe PAk
DEe PAk Nov 02, 2021 9:06PM ET
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give me 100 rupees
Jacob Steinschlag
Jacob Steinschlag Nov 02, 2021 4:18AM ET
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sure buy one of the most overvalued stocks on wall street at their ATH level. good job! Great analysis.
Siyabonga Innocent
Siyabonga Innocent Nov 02, 2021 4:18AM ET
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may we talk privately
Paul Goodnight
Paul Goodnight Nov 01, 2021 6:15PM ET
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Nrds buy or not ?
Pratt Man
Pratt Man Oct 31, 2021 11:03PM ET
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selling all my msft and rolling into clx after earnings
مون لايت
مون لايت Oct 31, 2021 3:30PM ET
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how to trade in gold online and please share your view for the gold price expectations this week
Brian Anderson
Brian Anderson Oct 31, 2021 12:49PM ET
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So you’re selling one near it’s annual low and buying one that just made a new ATH….
John Lakran
John Lakran Oct 31, 2021 12:49PM ET
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Problem with clorox is the 30 pe for a company that is very mature. The problem with Microsoft is they are so large their growth has got to slow after covid mania and the 40 pe is excessive and the likely move over the future is south as it cannot grow into itself there isn't enough new customers for a 2T company. Great phenomenonal company but price just doesn't make sense here at all for holders over the long term
Daniel Kertys
Daniel Kertys Oct 31, 2021 11:33AM ET
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Do the exact opposite of the article and you might be better off. odds od MSFT breakout continuation are slim, FOMC might affect tech run this week. CLX might have more value since it’s oversold and bouncing support as we speak
Nick Stressla
NickStressla Oct 31, 2021 11:33AM ET
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Doing the opposite of the article recommendations works well for me.
Mohd Izhar Muslim
Mohd Izhar Muslim Oct 31, 2021 8:40AM ET
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Oh well, That sounds great for me and also good News for everyone else.
Kim Boesgaard Lauritsen
Kim Boesgaard Lauritsen Oct 31, 2021 7:41AM ET
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thanks for that update Jesse, Hope you have a great day
Biniam Abera
Biniam Abera Oct 31, 2021 7:19AM ET
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Dump TSLA before they dump on you
 
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