With the major U.S. stock indices continuing their slow and steady ride upward, next week will again see the strength of this rally tested when the Federal Reserve announces its next move on interest rates.
The S&P 500 finished the past week just below a record high, after a nearly 7% rebound from its August low. The move has been fueled by positive earnings reports from some of the largest U.S. corporations and optimism that the U.S. and China are close to signing the first part of an actual trade deal.
This coming week, investors will get a chance to hear the latest quarterly earnings from some of the country's largest companies. Below, three stocks from different sectors worth focusing on:
1. AT&T
America’s largest telecom operator, AT&T (NYSE:T), will report Q3 2019 earnings on Monday, Oct. 28, before the market opens. Analysts, on average expect $0.93 a share profit for the period on sales of $45.13 billion.
One of the biggest challenges facing AT&T is how to produce growth when its core operations are struggling and unable to generate sufficient cash flows to service the company's huge debt load, while at the same time continuing to fund its rich cash dividend, which at present offers shareholders a 5.41% yield. Of all the non-financial sector U.S. firms, AT&T is, right now, the most indebted.
Investors want to see that AT&T is moving fast to tackle these issues. And there are some signs showing the Dallas-based company has already started dealing with the problem.
Earlier this month, AT&T announced it was raising the price of its TV Now package by as much as 30%—the second such fee hike this year, indicating the company is keen to improve margins and move away from competitive pricing. Because of this, during the quarter that ended on June 30, the company shed a record number of video customers. The move helped AT&T meet profit expectations and produce additional cash to cover its dividends.
AT&T is also making headway on asset sales. This includes the April divestment of a stake in video-streaming platform Hulu and Time Warner’s real-estate in New York.
These measures, combined with the company’s planned launch of its own streaming service—HBO Max—are boosting investor confidence and could help the stock to continue higher. After rising 23% this year, shares closed at $36.91 on Friday.
2. Beyond Meat
The El Segundo, California-based maker of plant-based burgers, Beyond Meat (NASDAQ:BYND) reports third-quarter earnings after the close on Monday, Oct. 28.
In July, while reporting its Q2 earnings, Beyond Meat boosted guidance, predicting at least $240 million in revenue this year—almost triple the 2018 total. Though the company continues to lose money, management now expects to break-even in 2019 on adjusted EBITDA. For the quarter that ended on Sept. 30, analysts are expecting the company to make $0.04 a share profit with sales surging to $81.83 million.
Still, even with this upbeat stance from management, Beyond Meat's stock, once the IPO darling of 2019 markets, is rapidly losing its shine. Last week, shares fell below $100 for the first time since June on investor anticipation that more insider selling will following BYND's earnings report. The stock closed on Friday at $100.81.
The decline in the stock's price since July has trimmed Beyond Meat’s post-IPO gains to 290% as some shareholders, including CEO Ethan Brown, took advantage of an early secondary offering to divest shares at a steep discount. Investors worry the same could happen when insider-selling restrictions expire on Oct. 29, the day after Beyond Meat's earnings release.
3. Apple
Apple (NASDAQ:AAPL), the maker of popular iPhones as well as computers and smart wearables, will report Q4 2019 results on Wednesday, Oct. 30 after the market close.
The stock has been showing strong resilience, surprising many analysts who thought the company’s maturing phone business would severely pressure its share price. But that pessimistic case has been rapidly weakening after the company’s late September launch of the iPhone 11. Unlike several recent iterations of the iconic smartphone, this newest version has been getting an enthusiastic reception. For the company’s fiscal 2019, Q4 results, analysts are expecting $2.83 a share profit on sales of $62.94 billion.
In recent weeks, several analysts have also raised their earnings forecasts, citing strong feedback from the company’s suppliers. Wall Street’s consensus estimates for iPhone shipments in Apple’s current fiscal year have increased by 3 million units since the new models went on sale on Sept. 20, according to FactSet.
“We are modestly raising our iPhone volume forecasts and expect investor sentiment on AAPL shares to improve materially,” J.P. Morgan analyst Samik Chatterjee said in a recent note, raising its price target on Apple shares to $265 from $243. “We are also increasing calendar 2020/2021 volume expectations led by stronger adoption of 5G enabled iPhones, expected to be launched in September 2020,” Chatterjee added.
Apple stock hit a record high last week of $246.73; shares closed marginally lower on Friday at $246.58, up 48% for the year.