Salesforce and Five Below: Buy These Stocks Before Earnings?

Today’s episode of Full Court Finance at Zacks quickly dives into the market to start the Thanksgiving-shortened week. The focus then shifts to Salesforce (NYSE:CRM) CRM and Five Below (NASDAQ:FIVE) FIVE ahead of their earnings releases during the first week of December to see if investors might want to consider buying either stock.

The market pulled back in late afternoon trading Monday after the S&P 500 and the Nasdaq both hit new highs earlier in the session. Some of the tech selling continued through morning Tuesday, with the technology-heavy index 1% lower through mid-day.

The drop was likely driven by some profit-taking after Wall Street reacted positively to news that President Biden would nominate Jay Powell for a second term as Fed Chairman. Investors appreciate the stability, even though rising prices could force the central bank to raise rates sooner than currently projected.

The bullish sentiment is being driven, in large part, by the fact that rates will remain historically low for the foreseeable future no matter how quickly the Fed might be forced to raise its core rate off its current rock-bottom levels. Plus, the overall S&P 500 earnings picture remains strong, despite near-term margin pressures (also read: The Retail Sector Margin Squeeze), which have yet to drag down the outlook for 2022 or 2023.

The positive backdrop for earnings and interest rates have helped the bulls justify looking beyond 30-year high inflation. And despite rising prices, supply chain setbacks, and difficulty filling millions of open jobs, U.S. retail sales jumped by a seasonally adjusted 1.7% in October vs. September.

This brings us to Five Below ahead of its third quarter fiscal 2021 financial release on Wednesday, December 1. The deep discount retailer has carved out a niche in a crowded space within retail that includes Dollar General DG. FIVE, which lands a Zacks Rank #3 (Hold) right now, is poised to continue to grow its top-line at solid clips as it expands its brick-and-mortar footprint and attracts customers with rather unique offerings even compared to Dollar General and other low-price peers.

Salesforce grabs a Zacks Rank #1 (Strong Buy) heading into Q3 fiscal 2022 earnings results due out on Tuesday, November 30. The software-as-a-service titan has bolstered its offerings through some big acquisitions in the last several years and it’s poised to grow for years to come as businesses, big and small, rely on Salesforce to do just about everything.

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