Are These The Best Stocks To Buy Before Earnings?
Is the stock market open on Presidents Day? If you are asking yourself this question this morning, you may be disappointed to find out that the stock market is indeed closed today (sorry). With the stock market closed today, it also gives us more time to prepare ourselves for another busy week ahead. You may have missed Bitcoin’s recent rally while relaxing over the long weekend. The cryptocurrency surpassed $49,000 for the first time, before falling back to below $48,000. But with such swings, I may not be able to truly relax.
While most of the attention is also garnered around the Reddit investors since the breakout of GameStop (NYSE: GME) and AMC Entertainment Holdings (NYSE: AMC), we have seen a number of huge single stock rallies beyond Reddit’s reach. You may also be enticed by the recent trend of buying high, selling higher. Well, not for me, I would still prefer to stick with buying low and selling high.
To say that I’m not influenced by the recent crazy trading activities would be a lie. That’s especially when we continue to observe that certain short-squeeze stocks continue to bring massive gains (at least in the short term) to shareholders. The recent rally of Tilray (NASDAQ: TLRY) would be another prime example of a stock trading frenzy after GameStop. But we can still sift through the noise and pay attention to single stocks that actually hold potential. One will need to do more work to find opportunities among these stocks. Investors that are willing to put in the work might want to pay attention to these four earnings reports this week.
Top Stocks To Watch This Week
- Walmart (NYSE: WMT)
- Baidu (NASDAQ: BIDU)
- Roku (NASDAQ: ROKU)
- Shopify (NYSE: SHOP)
Walmart Inc.
First up, investors are expecting jaw-dropping numbers in Walmart’s Thursday quarterly announcement that covers the Black Friday and the holiday shopping seasons. Judging from its recent reports by Walmart’s rivals like Target Corp. (NYSE: TGT) and Amazon.com (NASDAQ: AMZN), it is not surprising why investors are feeling optimistic about Walmart’s sales growth. When the company reports its earnings this Thursday, investors would most probably also be watching the numbers from Walmart+, which launched in September 2020.
So far, the company has yet to disclose any details on its new subscription service. But it’s also not important to note that the COVID-19 costs may continue to eat up the retailer’s profit margin.
Nevertheless, Walmart’s omnichannel efforts are driving growth during this pandemic. We will see if this plays out later this week. Should the company be able to prove itself, investors may likely bid up WMT stock again. With all these in mind, will you be adding WMT stock to your watchlist this week?
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Baidu Inc.
Baidu may not exactly be an interesting stock to watch since the search engine giant has been struggling for growth. For the uninitiated, the company focuses on providing internet-related services and artificial intelligence (AI) products. In fact, it is one of the biggest AI and internet companies in the world. However, Baidu’s investment in electric and autonomous vehicles has reignited investors’ interest in BIDU stock.
Earlier last week, the company deployed the world’s first “multi-modal” AV mobility as a service (MaaS) platform. Through the platform, citizens in the Huangpu district in Guangzhou now have access to AV city transportation services at their fingertips. Baidu has collaborated with the local government to make this a reality. If you ask me, I see this as a win-win situation for both parties.
On one hand, the city is able to provide more forms of public transport for the general population. On the other hand, Baidu gets to flex its AV technology in full force to over 800,000 citizens in the district. However, most of these new businesses would not make their way into Baidu’s Q4 earnings, which still largely come from its legacy businesses. The question is, will investors in BIDU stock be patient enough?
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Roku
Next up, streaming giant Roku will be reporting its earnings on February 18. After ROKU stock tripled since September 2020, investors are watching closely to see if the stock price has gotten way too far ahead of itself. In detail, the company operates via its proprietary video streaming platform, Roku Channel, which facilitates a plethora of top streaming services. Through this model, Roku can earn revenue through subscriptions and ads on its platform.
In more recent news, the company also picked up Amazon’s IMDb TV streaming service last month. With over 100 million active users between the two platforms, this benefit’s both sides. Primarily, Roku will be getting a part of the ad revenue generated from the free streaming service. And judging from its previous quarter, the company seems to be firing on all cylinders.
It reported a 73% increase in total revenue which added up to $451.66 million for the quarter. Now, as the company is reporting its quarterly numbers this week, would you be focusing on its valuation or its potential? If the latter, would you buy ROKU stock ahead of the quarterly earnings?
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Shopify Inc.
Lastly, e-commerce goliath, Shopify is another interesting stock reporting this week on February 17. The company’s SaaS and Platform-as-a-Service (PaaS) business has and continues to benefit from pandemic tailwinds.
However, after staggering gains of nearly 9,000% since its initial public offering, it’s really difficult to assess if now is still the right time to buy. The stock has gotten so hot that some may wonder if valuation concerns are outweighing the potential it could offer.
The e-commerce giant seems to be showing no signs of stopping with its partnership with Facebook (NASDAQ: FB). Expanding its payment option, Shop Pay, into Facebook’s marketplace seems like a strategic play because of the hordes of consumers in the world’s largest social media platform. Given its potential, would you say that its recent rally is still a concern? Perhaps some investors might adopt the “sell the news” approach this Wednesday. In any case, do you believe that the long term potential of SHOP stock makes it worth its price?
