Best Industrial Stocks To Buy In June

Key Insights

  • Analyst estimates for Caterpillar and Deere have moved higher in recent months despite worries about the health of the global economy. 
  • Meanwhile their stocks have declined together with the broader market. 
  • As a result, Caterpillar and Deere are trading at attractive valuation levels. 

S&P 500 has just moved to new lows, and the market is under broad pressure. Industrial stocks are not an exception and are moving lower together with the general market. However, earnings estimates for some industrial stocks have been moving higher in recent months while they remained under pressure, which can serve as a material upside catalyst when markets calm down.

Caterpillar

Analyst estimates for Caterpillar continue to move higher despite worries about the slowdown of the world economy. Currently, the company is expected to report earnings of $12.47 per share in 2022 and $14.5 per share in 2023, so the stock is trading at 14 forward P/E.

The key question is whether analyst estimates will remain at current levels at a time when markets are worried about the impact of the upcoming rate hikes from the Fed. In case analyst estimates stay near current levels, Caterpillar will have a good chance to gain upside momentum.

Deere

The situation is similar for Deere as analyst estimates have been improving in recent months. The company is expected to report earnings of $26.36 per share in the next year, so the stock is trading at 12 forward P/E.

Earnings estimates for both companies have been gaining ground as analysts believe that demand for their products will stay strong due to high prices for many commodities.

While Deere stock will likely remain under pressure in case the general market continues to fall at a robust pace, the stock could be among leaders during the rebound due to its attractive valuation.

To keep up with the latest earnings updates, visit our earnings calendar.

Let Price Action Show You What To Do In An Approaching Bear Market

At the end of the day, the price determines our loss or profit. Therefore, we should focus our research on price action rather than time lagging indicators or market fundamentals.

Following and trading price simply means that the market tells the trader what to do and not the other way around. Being one with price deposits money into a trader’s account. Whereas fighting price withdraws money out of a trader’s account. The price action is “Always” right as it does not care what a trader’s opinion or bias is.

Bull markets can go on for many years, but bear markets happen unexpectedly and can quickly destroy a trader’s profits or even their account. Bear markets move with a greater velocity than bull markets and they are accompanied by high volatility due to investor emotions (Fear, Greed, & Hope).

The simple definition of a bear market is a drop in price of -20% or greater from its recent maximum peak. Therefore, once a market drops -by 20% or greater, it is a bear market.

SUDDEN BIG price action UP DAYS CAUSE “FOMO”

Bear markets behave differently than bull markets in that bear markets are known for having sharp rallies. These rallies may last from 1-2 days to a few weeks. When these rallies occur, they tend to be an irresistible trap for many investors who are experiencing the fear of missing out “FOMO” syndrome. Institutions and professionals use “FOMO” to liquidate existing holdings and/or short the market.

History has shown that some of the greatest stock market percentage gain days have occurred during bear market periods. The following table is from Wikipedia and shows us that most if not all the extreme daily percentage gains or losses occurred within bear market time periods.

LIST OF LARGEST DAILY CHANGES IN THE S&P 500 INDEX

Source: Wikipedia

“SUCCESSFUL INVESTING IS A BATTLE FOR FINANCIAL SURVIVAL” – G.M. LOEB

Volatility generally has ruined many investors and traders. It’s one thing to trade a stock that experiences a 1-3% daily move. Trading in a stock, however, that is swinging 5-10% or has a sudden earnings surprise gap down of -20% is dangerous as it has the potential and high probability of eventually bankrupting most trading accounts.

Gerald Martin Loeb (July 24, 1899 – April 13, 1974) was a founding partner of the E.F. Hutton & Co. brokerage firm, acquired by Shearson Lehman Brothers in 1987 for almost $1 billion. He was a renowned wall street trader and the author of “The Battle for Investment Survival”.

Loeb stated: “When I started investing about 1921, it seemed a peaceful enough occupation. By 1943, I started calling it a “Battle”, though a lot of people might have used the term much earlier from 1929 to 1932. But now in 1957, it seems to be a “War”.

Here are some relevant quotes for our current market environment from Loeb’s book:

  • “I favor doing one’s major forecasting from the tape or, to put it another way, from the price movement.” “This to me is elemental and necessary to success.”
  • “The preservation of capital should be looked upon as something that normally costs a price.”
  • “It is far better to let cash lie idle than to buy just to “keep invested” or for “income”.”
  • “Losses must always be cut. They must be cut quickly, long before they become of any financial consequence.”
  • “The lessons of the 1923 stock market break taught me what I had to know to not get caught in the crash of 1929 to 1932.”
  • “There have been at least 8 periods since the turn of the century (1000) when the stock market, as measured by the Dow Jones Industrial Average, has dropped as much as 40%.” “It has happened before and of course will happen again.”

Let’s review and study some current markets that are now in a bear market.

SPY S&P 500 -20.58%

SPY S&P 500 ETF – The SPY has experienced a sharp -18.04% sell-off during the last 51-days. Even though the SPY has not closed below the dreaded -20% peak-to-trough level, price action has violated this level intraday.

If or when we are fortunate enough to get a sharp multi-day rally back up, we should be looking to liquidate any stocks that we are still holding. Depending upon the rally magnitude a trader may want to consider buying an inverse ETF of the SPY such as SH ProShares Short S&P 500 Inverse ETF (-1x).

Market volatility remains high, and history has shown it may expand considerably. For most traders, the best advice is to go to cash and ride out this storm from the sideline. In case you think this statement seems extreme please review the accompanying stock charts.

SPDR S&P 500 ETF TRUST • SPY • ARCA • 4-HOUR

SPY S&P 500 price action

DEERE & COMPANY -29.01%

Deere (NYSE: DE), is a major American multinational manufacturer of farm machinery and industrial equipment.

Deere’s price action, after taking out a 10-month triple top and making a new all-time high, plunged by -29.19% in just 30+ days. This is the worst drop in 14-years as Deere cited supply chain snags, rising inflation, and unfavorable currency translation headwinds.

DEERE & COMPANY • DE • NYSE • 4-HOUR

Deere & Company price action

TARGET CORPORATION -43.42%

Target (NYSE: TGT), is an American department store chain and the eighth largest retailer in the United States.

Target’s price action has dropped about -40% in the last 30-days including a whopping -25% a single day. Target had missed its earnings forecast by -$1.50 citing inflation, and supply chain factors. This was the biggest loss in Target’s stock price since 1987.

TARGET CORPORATION • TGT • NYSE • 4-HOUR

Target Corporation price action

ROSS STORES INC -47.23%

Ross (NYSE: ROST), is an American chain of discount department stores.

Ross price action has dropped more than -35% in the last 30-days including an opening price plunge of just shy of -25%. Ross’s massive opening price drop was precipitated by the company’s first-quarter 2022 earnings update where they reported comparable-store sales declined -by 7% due to inflation pressures impacting the retail consumer.

ROSS STORES INC • ROST • NASDAQ • 4-HOUR

Ross Stores price action

TESLA INC -48.95%

Tesla (NASDAQ: TSLA), is an American automotive and clean energy company that designs and manufactures electric vehicles, battery energy storage from home to grid-scale, solar panels and solar roof tiles, related products, and services.

Tesla’s price action has dropped more than -44% in the last 45-days.  Only a few months ago Tesla’s market cap was over $1 trillion. At its current level, Tesla’s market cap is now $687 billion which represents approximately a $400 billion loss in value from its early January 2022 high.

TESLA INC • TSLA • NASDAQ • 4-HOUR

Tesla price action

LEARN more about price action FROM OUR TEAM OF SEASONED Traders

In today’s market environment, it’s imperative to assess your trading plan, portfolio holdings, and cash reserves. Experienced traders know what their downside risk is and adapt as necessary. Successful traders manage risk by utilizing stop-loss orders, rebalancing existing positions, reducing portfolio holdings, liquidating investments, and moving into cash.

Managing risk and expectations for both investments in real estate and the stock market is the key for long-term success. Do this, and you can avoid the rollercoaster ride of doing nothing to protect your investments.

Successfully managing our drawdowns ensures our trading success. The larger the loss, the more difficult it will be to make up. Consider the following:

  • A loss of 10% requires an 11% gain to recover
  • A 50% loss requires a 100% gain to recover
  • A 60% loss requires an even more daunting 150% gain to simply return to break even.

Recovery time also varies significantly depending upon the magnitude of the drawdown. A 10% drawdown can typically be recovered in weeks or months, while a 50% drawdown may take years to recover.

Depending on a trader’s age, they may not have the time to wait on the recovery or the patience. Therefore, successful traders know it’s critical to keep their drawdowns within reason. Most of them learned this principle the hard way.

HOW WE CAN HELP YOU LEARN TO INVEST CONSERVATIVELY?

At TheTechnicalTraders, my team and I can do these things:

  • Reduce your FOMO and manage your emotions.
  • Have proven trading strategies for bull and bear markets.
  • Provide quality trades for investing conservatively.
  • Tell you when to take profits and exit trades.
  • Save you time with our research.
  • Provide above-average returns/growth over the long run.
  • Have consistent growth with low volatility/risks.
  • Make trading and investing safer, more profitable, and educational.

Sign up for my free trading newsletter so you don’t miss the next opportunity!

We invite you to join our group of active traders who invest conservatively together. They learn and profit from our three ETF Technical Trading Strategies which include a real estate ETF. We can help you protect and grow your wealth in any type of market condition. Click the following link to learn more: www.TheTechnicalTraders.com

Chris Vermeulen
Chief Market Strategist
Founder of TheTechnicalTraders.com

Deere Is Down By 7%, Here Is Why

Key Insights

  • Deere reported fiscal Q2 results, easily beating analyst expectations. 
  • However, it was not sufficient enough to push the stock higher as traders’ expectations were elevated. 
  • The stock trades at 13 forward P/E and may attract speculative traders who are willing to bet on the rebound after an almost 25% pullback from all-time highs.

Deere Stock Declines As Guidance Fails To Meet Traders’ Expectations

Shares of Deere gained strong downside momentum after the company released its fiscal second quarter report. Deere reported revenue of $13.37 billion and GAAP earnings of $6.81 per share, beating analyst estimates on both earnings and revenue. The company noted that demand remained strong despite supply chain issues.

In fiscal 2022, Deere expects to report net income of $7 billion – $7.4 billion and net operating cash flow of $5.6 billion – $6 billion. The market was more optimistic, so the stock found itself under significant pressure.

It should be noted that Deere shares were up by 6% year-to-date ahead of the release of the earnings report, so the stock outperformed S&P 500 by a wide margin. In this light, it is not surprising that traders’ expectations were elevated, and a decent report caused a sell-off.

What’s Next For Deere Stock?

Currently, analysts expect that Deere will report earnings of $22.7 per share in the current fiscal year and earnings of $26.22 per share in the next fiscal year, so the stock is trading at 13 forward P/E.

Analyst estimates have been mostly moving higher in recent months, which provided additional support to the stock.

Deere made an attempt to settle above the $445 level back in April, but the broad sell-off in the markets put pressure on the stock and pushed it to the $340 level after the release of the fiscal Q2 report.

The company’s valuation looks attractive, so the stock may get some support from speculative traders after an almost 25% pullback from all-time highs.

To keep up with the latest earnings updates, visit our earnings calendar.

Stock Bulls Remain Optimistic As Data Indicates a Slowdown in Manufacturing Inflation

Stock bulls remain extremely cautious but a bit more optimistic as data indicates a slowdown in manufacturing inflation. The Producer Price Index rose +11% year-over-year in April, higher than expected but a meaningful pullback from March’s +11.5%. Producer prices lead consumer prices, so the report is a good sign overall, though investors, as well as the Fed, will need to see a couple more months of declines before declaring that inflation is indeed cooling.

Inflation

Economists also warn that goods inflation may be coming down because consumer demand is shifting more to services, meaning high prices could simply be moving from one part of the economy to another. The latest data shows services prices are rising at the fastest rate in three decades with airfare leading the way. Even if inflation has peaked, the question now is, how long will it remain elevated?

Federal Reserve Chair Jerome Powell cautioned yesterday that he can’t guarantee the central bank can deliver a so-called “soft landing” for the economy, pointing to the tight labor market and ongoing supply chain dislocations. Powell also stressed that other “huge events” are playing important roles right now, including Russia’s war in Ukraine, that are beyond the Fed’s control. Powell made the comments after being confirmed by the Senate for a second 4-year term.

The central bank’s target inflation rate is still a “flexible +2%” but several officials have indicated that the new normal might be more in the +2.5% to +3% range. One of the main gauges (but not the only one) the Fed uses to determine the rate of inflation is the Core PCE Prices Index, which for March was running at +5.2%. The April read is due out on May 27, which is a couple weeks ahead of the Fed’s next meeting on June 14-15.

Data to watch

Consumer data recently has been sending mixed signals that are hard to interpret. Sentiment has been mostly falling since the start of the year but consumer spending has not shown any signs of pullback.

Next week, investors get an update on how spending is holding up via April Retail Sales on Tuesday. A slew of fresh housing data next week will provide a deeper look at how substantially higher mortgage rates might be impacting the market. The NAHB Housing Market Index for May is out on Tuesday, followed by April Housing Starts on Wednesday, and April Existing Home Sales on Thursday.

Several key earnings are on the calendar next week as well, including Home Depot and Walmart on Tuesday; Cisco, Lowe’s, Target, and TJX Companies on Wednesday; Applied Materials, Palo Alto Networks, and Ross Stores on Thursday; and Deere & Co. on Friday.

Best Industrial Stocks To Buy Now

Key Insights

  • Caterpillar and Deere retreated after testing yearly highs. 
  • The pullback was driven by general market sentiment and the recent weakness in commodity markets. 
  • Both stocks are trading at less than 15 forward P/E, which is reasonably cheap for the current market environment. 

Several industrial stocks have recently suffered a material pullback after testing yearly highs as traders decided to take some profits off the table amid general market weakness. This sell-off may provide speculative traders with an opportunity to buy these stocks at a discount.

Caterpillar

Caterpillar stock has recently made an attempt to get to the test of the $240 level but lost momentum and pulled back towards the $210 level.

Analysts expect that Caterpillar will report earnings of $12.15 per share in the current year and $14.48 per share in the next year, so the stock is trading at less than 15 forward P/E. It should be noted that earnings estimates have been mostly stable in recent weeks.

At this point, the markets are worried that rising interest rates will hurt the economy and put pressure on stocks. However, commodity markets should remain strong despite the recent pullback, so demand for Caterpillar products would likely remain strong as well, and the stock would have a good chance to get back to the recent highs.

Deere

Deere stock has also found itself under significant pressure in recent trading sessions. The company is expected to report earnings of $26.18 per share in the next year, so the stock is trading at roughly 14 forward P/E.

The recent stock price action is a reaction to general nervousness and the pullback in commodity markets. However, the company’s stock is trading at reasonable valuation levels, which could attract speculative traders who are willing to bet that the recent strong pullback was not justified.

For a look at all of today’s economic events, check out our economic calendar.

Shares of Farm Equipment Maker Deere Rise on Earnings Beat, Guidance Hike

Deere & Company shares rose over 1% in pre-market trading on Friday after the world’s largest maker of farm equipment reported better-than-expected earnings in the fiscal first quarter and lifted its annual profit forecast.

The agricultural, construction and forestry equipment manufacturer said its net sales from equipment operations rose nearly 6% to $8.5 billion, surpassing the Wall Street consensus estimate of $8.2 billion. The company’s net income declined to $903 million, or $2.92 per share. That too beat the market expectations of $2.38.

The world’s largest farm equipment maker forecast fiscal 2022 net income in the range of $6.7 billion and $7.1 billion, higher than the previous estimate of $6.5 billion to $7.0 billion.

Deere (DE) FY 1Q22 EPS of $2.92 vs. Cons of $2.35 and Jef at $2.20. F1Q was a beat across the board, with slightly higher sales and margin and a lower tax rate all contributing. DE raised its F22 outlook for Net Income and now calls for Net Income of ~$6.9bn at Mid-Point (Prior: $6.75bn at Mid-Point), although consensus was already at $6.9bn. Guidance implies a ~25% incremental EBIT margin,” noted Stephen Volkmann, equity analyst at Jefferies.

Deere stock rose over 1% to $385.50 in pre-market trading on Friday. The stock rose nearly 11% so far this year after surging over 27% in 2021.

Analyst Comments

“Despite a significant number of headwinds in 1Q, Deere (DE) posted a clean top & bottom line beat & raised FY22 guidance by 2.5%. DE’s newly initiated Leap Ambitions – incl a 20% Equip Ops OROS target (vs. 15% mid-cycle op margin target prior) – should refocus investors on the LT secular thesis,” noted Courtney Yakavonis, Equity Analyst at Morgan Stanley.

“Deere (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given an historically lower cyclicality of Ag Equipment and history of strong management execution. FY22 should see a continued acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment. With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

Deere Stock Price Forecast

Fifteen analysts who offered stock ratings for Deere in the last three months forecast the average price in 12 months of $435.50 with a high forecast of $487.00 and a low forecast of $320.00.

The average price target represents a 14.45% change from the last price of $380.53. Of those 15 analysts, 11 rated “Buy”, three rated “Hold”, while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $485 with a high of $664 under a bull scenario and $261 under the worst-case scenario. The investment bank gave an “Overweight” rating on the farm equipment maker’s stock.

Several analysts have also updated their stock outlook. D.A. Davidson raised the target price to $455. Deutsche Bank lifted the price objective to $400 from $398. Oppenheimer upped the price target to $425 from $395. Barclays increased the target price to $415 from $400.

Technical analysis suggests it is good to hold as 100-day Moving Average and 100-200-day MACD Oscillator shows a mixed signal.

Check out FX Empire’s earnings calendar

Wall Street Week Ahead Earnings: Shopify, Baidu, Walmart, Deere and DraftKings in Focus

Investors will focus on December quarter earnings for stocks that are economically sensitive, which should show better profits than technology stocks. Increasing Treasury yields and risk aversion could hit the stock market hard over the coming months. In addition, investors will closely monitor the latest news on the rapidly spread Omicron coronavirus variant to see how it impacts earnings in 2022.

Earnings Calendar For The Week Of February 14

Monday (February 14)

TICKER COMPANY EPS FORECAST
AAP Advance Auto Parts $1.93
ALX Alexander’s $4.29
AMKR Amkor Technology $0.65
ANET Arista Networks $0.6
SRC Spirit Realty Capital $0.81
VNO Vornado Realty Trust $0.76
WEBR Weber $-0.02

Tuesday (February 15)

TICKER COMPANY EPS FORECAST
ABNB Airbnb $0.05
AKAM Akamai Technologies $1.14
DVN Devon Energy $1.24
MAR Marriott International $1.04
RPRX Royalty Pharma $0.79
VIAC ViacomCBS $0.37
WFG West Fraser Timber $3.51

 

Wednesday (February 16)

IN THE SPOTLIGHT: SHOPIFY, BAIDU

SHOPIFY: Canadian multinational e-commerce company is expected to report its fourth-quarter earnings of $0.62 per share, which represents a year-over-year decline of over 46% from $1.15 per share seen in the same period a year ago. But the e-commerce software company would post revenue growth of over 37% to $1.34 billion.

According to Barron’s report, Gary Robinson, investment manager at Baillie Gifford said that Shopify is miles ahead of its competitors in helping merchants all over the world sell their items. He added that the company’s revenue could rise sharply in the next five years.

BAIDU: The Chinese tech giant is expected to report its fourth-quarter earnings of $1.89 per share, which represents a year-over-year decline of nearly 40% from $3.08 per share seen in the same period a year ago.

However, Baidu Inc, a leader in the Chinese search industry in terms of user market share, would post revenue growth of about 9% to $5.04 billion. The company has beaten consensus earnings estimates in most of the quarters in the last two years, at least.

“We maintain a “Buy” rating for Baidu (BIDU) with a target price of RMB 165. Our target price is based on the forward P/E of 18.48x and forward P/S of 0.42x for FY22. Non-GAAP EPS of RMB 56.59 ($8.98) for FY22. This provides an upside potential of 15% over the CMP of RMB 143.80,” noted Shejal Ajmera is founder and head of research at CrispIdea.

“We decrease our estimate for revenue growth to 14.3% from 19% for FY21 due to China’s low GDP growth. We estimate revenue growth of 10% for FY22 and 12% for FY23. We estimate EPS of RMB 56.19 ($8.87) and RMB 56.59 ($8.93) for FY21 and FY22, respectively.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 16

TICKER COMPANY EPS FORECAST
AMAT Applied Materials $1.85
SAM Boston Beer $2.87
H Hyatt Hotels $-0.08
MGY Magnolia Oil & Gas $0.77
MRO Marathon Oil $0.52
NVDA Nvidia $1.0
TRIP TripAdvisor $-0.04

 

Thursday (February 17)

IN THE SPOTLIGHT: WALMART

Bentonville, Arkansas-based retailer Walmart is expected to report its fourth-quarter earnings of $1.49 per share, which represents year-over-year growth of over 7% from $1.39 per share seen in the same period a year ago.

The multinational retail corporation that operates a chain of hypermarkets would post revenue growth of nearly 1% to $150.91 billion. The company has beaten consensus earnings estimates in most of the quarters in the last two years, at least.

“Latest AlphaWise data shows Walmart+ membership continues to increase, with ~15m members total (~12% household penetration) & ~1m net members added in the past quarter. Overlap between Walmart+ & Prime remains high; we’ll monitor if this changes with a Prime fee hike coming,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“We expect Walmart (WMT) to sustain recent momentum in its core business in F’22/F’23 and see a growing ability to balance longer-term investments with near-term returns. Our OW rating and $170 PT are underpinned by a preference for 1) quality players with scale and 2) defensive retailers as the market undergoes a mid-cycle transition.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 17

TICKER COMPANY EPS FORECAST
AN AutoNation $4.96
DBX Dropbox $0.2
ROKU Roku $0.01

 

Friday (February 18)

IN THE SPOTLIGHT: DEERE, DRAFTKINGS

DEERE: The world’s largest maker of farm equipment, is expected to report its fiscal first-quarter earnings of $2.28 per share, which represents a year-over-year decline of over 41% from $3.87 per share seen in the same period a year ago. The agricultural, construction and forestry equipment manufacturer would post revenue growth of about 0.5% to $8.09 billion.

“Higher input and freight costs to affect FY22 margins. We downgrade our rating to “Hold” from “Buy” for Deere & Co. and upgrade our TP to $406 for FY23. We derive TP based on non-GAAP EPS to $22.30 & $25.14 for FY22 & FY23, respectively and P/E of ~16.1x for FY23. This provides an upside potential of 8.6% from CMP of $373.79,” noted Shejal Ajmera, Head of Research at Crispidea.

“Following are the reasons for the above assumptions: 1) Strong demand in farm and construction equipment to aid topline; 2) Focus on automation to ensure long term growth and 3) Short term headwinds to affect profitability.”

DRAFTKINGS: The U.S.-focused gambling operator is expected to report its fourth-quarter loss of $0.78 per share, a dime greater than the loss of $0.68 it recorded in the same period a year ago. But the revenue would grow more than 36% to $439.5 million.

“We forecast legal US sports betting & iGaming to increase from <$1.5B in 2019 to $20.6B in 2025 as more states legalize and spend per capita rises. Forecast DKNG to maintain top tier share, 24% in OSB and 21% in iGaming in 2025. Investors question LT profits, but other developed markets have shown 25-30%+ profits for operators at maturity, esp. those with a customer acq. advantage similar to DKNG’s with its DFS database,” noted Thomas Allen, equity analyst at Morgan Stanley.

“Current valuation of 9x 2025e EBITDA does not reflect long-term margins or growth. Upside drivers include signs of profits in mature states, new product innovation and higher market share. Downside risks include higher losses, greater competition and lagging product innovation.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 18

TICKER COMPANY EPS FORECAST
ABR Arbor Realty Trust $0.39
B Barnes Group $0.49
BLMN Bloomin’ Brands $0.52
DE Deere & Co. $2.28

 

Big Money Drives Deere

And the heavy machinery giant could rise even more due to easing supply chain pressures and new autonomous products. But another likely reason is Big Money lifting the stock.

So, what’s Big Money? Said simply, that’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.

Smart money managers are always looking for the next hot stock. And Deere has many fundamental qualities that are attractive.

This sets up well for the stock going forward. But how the shares have been trading points to more upside. As I’ll show you, the Big Money has been consistent in the shares.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all the Big Money signals DE has made the last year.

The last few weeks have seen Big Money activity, too. Each green bar signals big trading volumes as the stock ramped in price:

Source: www.mapsignals.com

In the last year, the stock attracted 19 Big Money buy signals. Generally speaking, recent green bars could mean more upside is ahead.

Now, let’s check out technical action grabbing my attention:

Outperformance is important for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, Deere has been growing sales and earnings at double-digit rates. Take a look:

  • 1-year sales growth rate (+23.7%)
  • 3-year earnings growth rate (+47.8%)

Source: FactSet

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, DE has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock has buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

DE has a lot of qualities that are attracting Big Money. It’s made this list five times since 2016, with its first appearance on 1/2/2018…and gaining 136.56% since. The blue bars below show the times that Deere was a top pick:

Source: www.mapsignals.com

It’s been a top stock in the industrial sector according to the MAPsignals process. I wouldn’t be surprised if DE makes additional appearances in the years to come. Let’s tie this all together.

The Bottom Line

The Deere rally could have further to go. Big Money buying in the shares is signaling to take notice. Shares could be positioned for further upside. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.

Disclosure: the author holds no positions in DE at the time of publication.

Learn more about the MAPsignals process here.

Disclaimer

https://mapsignals.com/contact/

 

Starbucks Investors Dismiss Unionization Vote

Starbucks Corp. (SBUX) held close to weekly highs on Friday, despite reports that workers in Buffalo, NY have voted to unionize at least one café. Four other stores are trying to set a vote (three in Buffalo and one in Arizona), with successful efforts likely to stoke similar drives in other locales. Even so, market players may be discounting the Buffalo vote due to the city’s progressive reputation, where a Socialist candidate was beaten in November’s mayoral race.

Union Tempest in a Teapot?

Hourly wage issues are plaguing all sorts of retail and industrial operations as a result of rising inflation triggered by the two-year pandemic, as characterized by well-publicized strikes at Deere and Co. (DE) and Kellogg Co. (K). Whether or not this turns into a nationwide phenomenon remains to be seen, with well-entrenched management and a generally union-adverse American work force that’s repulsed by the Socialist stigma of collective bargaining.

MKM Partners analyst Brett Levy dismissed the unionization effort last week, upgrading Starbucks to ‘Buy’ with a $130 target. As he notes “Despite an operating model facing near-term pressures related to internal decisions, macro-related factors, and the understanding that a straight-line recovery is unlikely, we are choosing to look past these short-term hurdles. We have long been supportive of SBUX’s brand strength/scale; development opportunities; and the balancing of investments in its brand, people, technology and returns to the investment community”.

Wall Street and Technical Outlook

Wall Street consensus stands at a ‘Moderate Buy’ rating based upon 15 ‘Buy’, 7 ‘Hold’, and no ‘Sell’ recommendations. Price targets currently range from a low of $105 to a Street-high $142 while the stock will open Monday’s session about $9 below the average $125 target. This modest placement bodes well for higher prices but that might have to wait until investors can gauge the impact of the Omicron wave, if any, on same store sales around the world.

Starbucks topped out near 100 in July 2019 and sold off to a 20-month low during March 2020’s pandemic decline. The subsequent uptick reached the prior high in November, yielding an immediate breakout that added points at a healthy pace into July 2021’s all-time high at 126.32. The subsequent pullback has carved an inverse head and shoulders pattern across the 50-day moving average, with a breakout setting off buying signals that favor a test of the rally high.

Catch up on the latest price action with our new ETF performance breakdown.

Disclosure: the author held Kellogg in a family account at the time of publication. 

 

Deere Stock Rises on Earnings Beat, Low Impact of Supply Chain Disruption and Strike

Deere & Company shares rose over 3% in pre-market trading on Wednesday after the world’s largest maker of farm equipment reported better-than-expected earnings in the fiscal fourth quarter and beat analysts’ consensus of 2021 earnings forecasts.

In the quarter to Oct. 31, net income rose 69% to $1.28 billion, or $4.12 per share, beating the Wall Street expectations of $3.90. However, Deere’s equipment sales were slightly below expectations at $10.28 billion. The company also forecast $6.5 billion to $7 billion in earnings for 2021, higher than the market consensus estimates of $6.72 billion at the midpoint of the range, according to Reuters.

The agricultural, construction and forestry equipment manufacturer said its worldwide net sales and revenues increased 16% to $11.3 billion, for the fourth quarter of fiscal 2021 and rose 24% to $44.0 billion for the full year.

Following this, Deere shares rose over 3% to $360.33 in pre-market trading on Wednesday.

Executive Comments

“Looking ahead, we expect demand for farm and construction equipment to continue benefiting from positive fundamentals, including favourable crop prices, economic growth, and increased investment in infrastructure,” said John C. May, chairman and chief executive officer.

“At the same time, we anticipate supply-chain pressures will continue to pose challenges in our industries. We are working closely with our suppliers to address these issues and ensure that our customers can deliver essential food and infrastructure more profitably and sustainably.”

Analyst Comments

Deere (DE) FY 4Q21 EPS of $4.12 vs. Cons of $3.98 and Jef at $3.35. Sales and margins were slightly below the street but beat our numbers (we recently cut to account for the strike, but most analysts had not). Higher other expense appears to account for the beat vs consensus, but DE weathered the strike with minimal impact. The mid-point of F22outlook of $6.75bn in Net Income (~$21.50-21.85 implied EPS depending on share repo) compares to Consensus of $21.65 in EPS,” noted Stephen Volkmann, equity analyst at Jefferies.

Deere Stock Price Forecast

Seven analysts who offered stock ratings for Deere in the last three months forecast the average price in 12 months of $409.14 with a high forecast of $450.00 and a low forecast of $354.00.

The average price target represents a 17.14% change from the last price of $349.28. From those seven analysts, four rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $442 with a high of $620 under a bull scenario and $235 under the worst-case scenario. The firm gave an “Overweight” rating on the farm equipment maker’s stock.

Deere (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given a historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

Several other analysts have also updated their stock outlook. Citigroup cut the price target to $400 from $415. Deutsche Bank lowered the target price to $375 from $383. Evercore ISI slashed the target price to $354 from $470.

Technical analysis suggests it is good to sell as 100-day Moving Average, and 100-200-day MACD Oscillator signals a strong selling opportunity.

Check out FX Empire’s earnings calendar

Deere on Track to Beat Earnings Estimates; Supply Chain Disruption a Risk

Deere & Company, the world’s largest maker of farm equipment, is expected to report its fiscal fourth-quarter earnings of $3.92 per share, which represents year-over-year growth of over 64% from $2.39 per share seen in the same period a year ago.

The agricultural, construction and forestry equipment manufacturer would post revenue growth of more than 20% to $10.5 billion. It is worth noting that in the last two years the company has delivered an earnings share price (EPS) at all times.

“We expect Deere to likely post revenues below, but earnings above, the consensus estimates. While a gradual opening up of the economies with a rise in vaccination rates has resulted in a sharp rebound in overall equipment demand over the recent quarters, a trend likely continued in Q3 as well, the company’s overall performance may be weighed down by higher raw material costs and supply chain headwinds,” noted analysts at Trefis.

“That said, our forecast indicates that Deere’s valuation is $434 per share, which is around 22% above the current market price of $357.”

Deere shares have gained over 30% so far this year. The stocks traded over 2.0% higher at $353.15 on Monday. Wednesday’s better-than-expected results could help the stock recoup recent losses.

Deere Stock Price Forecast

Seven analysts who offered stock ratings for Deere in the last three months forecast the average price in 12 months of $409.14 with a high forecast of $450.00 and a low forecast of $354.00.

The average price target represents a 16.55% change from the last price of $351.03. From those seven analysts, four rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $442 with a high of $620 under a bull scenario and $235 under the worst-case scenario. The firm gave an “Overweight” rating on the farm equipment maker’s stock.

Deere (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given a historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

Several other analysts have also updated their stock outlook. Citigroup cut the price target to $400 from $415. Deutsche Bank lowered the target price to $375 from $383. Evercore ISI slashed the target price to $354 from $470.

Technical analysis suggests it is good to sell as 100-day Moving Average, and 100-200-day MACD Oscillator signals a strong selling opportunity.

Analyst Comments

“Despite positive secular demand fundamentals within both the Ag and Construction businesses we are lowering near-term estimates for Deere (DE) (F4Q21/F1Q22) to better reflect the impact from lost production in the US stemming from supplier bottlenecks and the labour strike,” noted Stephen Volkmann, equity analyst at Jefferies.

“We assume any lost production elongates the cycle, and we maintain our above Consensus estimates for 2023 noting additional upside from the infrastructure bill has yet to be factored into outlooks.”

Best Stocks, Crypto, and ETFs to Watch – Deere and Co., Zoom and Bitcoin in Focus

Stocks

Deere and Co. (DE) heads a light holiday week calendar, with Wednesday’s pre-market report expected to show a profit of $3.87 per-share on $10.57 billion in revenue. The farm and construction machinery giant soared between March 2020’s pandemic low and May 2021’s all-time high at 400, underpinned by rapidly escalating agricultural prices and the transition into AI farming equipment, which will feature driverless combines, pickers, strippers, scrapers, seeders, and harvesters.

Zoom Interactive Communications Inc. (ZM) was the hottest stock in 2020’s momentum market, exploding to higher ground as workers were forced to lock down and conduct business remotely. Heightened competition and the end of those restrictions haven’t been kind to the company, which has dropped 57% since October 2020. Even so, it’s posted an impressive 369% return since the start of 2020. The company reports earnings after Monday’s closing bell.

Black Friday marks the start of the 2021 holiday season in the United States, with retailers offering deep discounts to attract floor traffic and eyeballs. Best Buy Co. (BBY) earnings on Tuesday will offer preview of sales expectations, which have been complicated by widespread supply disruptions. However, we learned during third quarter earnings that good companies are powering through these headwinds while bad companies are using them as excuses for poor performance.

Crypto

Bitcoin took a beating last week, dropping nearly 12% to a 5-week low. More importantly, the decline triggered a failed breakout above April’s high at 65,895, stoking fears the crypto king is forming a bearish double top pattern. However, many double tops yield more bullish patterns so let’s pull up a chair and see if the instrument finds support above the September swing  high  at 53,000, potentially heralding the last leg of a cup and handle breakout.

ETFs

iShares Russell-2000 Index Fund ETF (IWM) broke out above 7-month symmetrical triangle resistance at the start of November, lifting to an all-time high at 244.46 just 8-days later. It’s been pulling back since that time and is now approaching breakout support between 230 and 232. In turn, this predicts the decline will offer a low risk buying opportunity, ahead of higher prices into 2022.  The timing couldn’t be better, with positive small cap seasonality in force until the end of March.

For a look at today’s economic events, check out our earnings calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Earnings to Watch in Holiday-Shortened Week: Zoom, Medtronic, Best Buy, Dollar Tree and Deere in Focus

Earnings Calendar For The Week Of November 22

Monday (November 22)

IN THE SPOTLIGHT: ZOOM

The San Jose, California-based communications technology company Zoom is expected to report its fiscal third-quarter earnings of $1.09 per share, which represents year-over-year growth of over 10% from $0.99 per share seen in the same period a year ago.

The company, which provides video telephony and online chat services through a cloud-based peer-to-peer software platform, would post revenue growth of over 30% to $1.02 billion. Zoom will report 3Q FY22 earnings after market close on Monday, November 22.

“Investors lean cautious heading into FQ3 print given ongoing concerns around SMB churn, particularly as other WFH names have underperformed. View FQ4 print as having more favourable risk/reward, but given cautious positioning, could see outperformance if SMB churn is better than expected,” noted Meta Marshall, equity analyst at Morgan Stanley.

Zoom has established its position as the leader in video conferencing, now a growth market. The company has a meaningful competitive moat built on more than just architecture. Position within customers makes an attractive opportunity to expand into the broader UC market. Early wins are encouraging. Opportunities to expand the platform remain. Manageable churn post-COVID as a move to hybrid work setups.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 22

Ticker Company EPS Forecast
JKS JinkoSolar Holding Co. Ltd. ADR -$0.07
GRFS Grifolsbarcelona $0.29
JOBS 51job $4.45
GGAL Grupo Financiero Galicia $0.68
ZM Zoom Video Communications $1.09
A Agilent $1.18
KEYS Keysight Technologies $1.64
URBN Urban Outfitters $0.83
BMA Banco Macro $1.22
TLK Telekomunikasi Indns Tbk Prshn Pp Pt $0.46

Tuesday (November 23)

IN THE SPOTLIGHT: MEDTRONIC, BEST BUY, DOLLAR TREE

MEDTRONIC: The medical device company is expected to report its fiscal second-quarter earnings of $1.29 per share, which represents year-over-year growth of over 26% from $1.02 per share seen in the same period a year ago.

The company has beaten earnings per share (EPS) estimates all times in the last four quarters with a surprise of over 13%. The Fridley, Minnesota-based medical company would post revenue growth of nearly 4% to $7.9 billion.

Medtronic (MDT) commentary and guide should act as a barometer for MedTech recovery through the balance of ’21 and into ’22. More muted recovery through October could incrementally pressure 2FQ, with the path to 9% y/y FY22 growth looking increasingly challenging in the face of recent sector headwinds,” noted Cecilia Furlong, equity analyst at Morgan Stanley.

BEST BUY: The Richfield, Minnesota consumer electronics retailer is expected to report its fiscal third-quarter earnings of $1.93 per share, which represents a year-over-year decline of over 6% from $2.06 per share seen in the same period a year ago.

The consumer electronics retailer’s revenue would decline 2.5% to $11.56 billion down from $11.85 billion a year earlier. It is worth noting that in the last two years the company has delivered an earnings share price (EPS) at all times.

“Market looking for a 4-5% comp in Q3 vs cons at -1.5%. We see upside to 2H’21 numbers and expect a raised full-year guide as demand remains strong. That said, momentum is slowing and the category could shrink in ’22/’23. The stock is +15% in the last month, and a Q3 beat and raise seems priced in,” noted Simeon Gutman, equity analyst at Morgan Stanley.

DOLLAR TREE: The Chesapeake, Virginia-based company is expected to report earnings of $0.96 per share in the third quarter, down over 30% from $1.39 per share seen in the same period a year ago. But the discount variety stores that sells items for $1 or less would post revenue growth of nearly 4% to $6.4 billion.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 23

Ticker Company EPS Forecast
CPG Compass Group £17.93
BYG Big Yellow £19.26
MDT Medtronic $1.29
BBY Best Buy $1.93
DLTR Dollar Tree $0.96
J Jacobs Engineering Group Inc $1.57
BURL Burlington Stores $1.24
SJM J.M. Smucker $2.04
DKS Dick’s Sporting Goods $2.03
PLAN Progressive Planet -$0.11
AEO American Eagle Outfitters $0.60
ANF Abercrombie & Fitch $0.65
DY Dycom Industries $0.75
JWN Nordstrom $0.56
NOAH Noah $2.95
VMW VMware $1.54
HPQ HP $0.88
GME GameStop -$0.51
CPB Campbell Soup $0.81
GPS Gap $0.50
SVT Severn Trent £49.79

Wednesday (November 24)

IN THE SPOTLIGHT: DEERE

Deere & Company, the world’s largest maker of farm equipment, is expected to report its fiscal fourth-quarter earnings of $3.92 per share, which represents year-over-year growth of over 64% from $2.39 per share seen in the same period a year ago.

The agricultural, construction and forestry equipment manufacturer would post revenue growth of more than 20% to $10.5 billion. It is worth noting that in the last two years the company has delivered an earnings share price (EPS) at all times.

“Despite positive secular demand fundamentals within both the Ag and Construction businesses we are lowering near-term estimates for Deere (DE) (F4Q21/F1Q22) to better reflect the impact from lost production in the US stemming from supplier bottlenecks and the labour strike,” noted Stephen Volkmann, equity analyst at Jefferies.

“We assume any lost production elongates the cycle, and we maintain our above Consensus estimates for 2023 noting additional upside from the infrastructure bill has yet to be factored into outlooks.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE NOVEMBER 24

Ticker Company EPS Forecast
UU United Utilities £25.21
JMAT Johnson Matthey £44.57
BVIC Britvic £31.37
DE Deere & Company $3.92
TCOM Trip.com Group Ltd $0.11
KC Kutcho Copper -$1.53

Thursday (November 25)

No major earnings are scheduled for release. The U.S. stock market will be closed for the Thanksgiving holiday.

Friday (November 26)

No major earnings are scheduled for release. The U.S. stock market will be closed for the Thanksgiving holiday.

Stocks Move Closer To All-Time Highs

Stocks Set To Gain Ground At The Start Of The Week

S&P 500 futures are gaining ground in premarket trading as traders believe that the recent pullback is over and are ready to push stocks to all-time high levels.

Today, U.S. President Joe Biden will sign the $1 trillion infrastructure bill. The ceremony may provide additional support to infrastructure stocks like Caterpillar or Deere, which are already moving higher in premarket trading.

It’s a rather quiet day on the economic front, but traders have a chance to take a look at NY Empire State Manufacturing Index report for November. The report indicated that NY Empire State Manufacturing Index increased from 19.8 in October to 30.9 in November compared to analyst consensus of 21.2.

WTI Oil Tests Support At $80 As Coronavirus Fears Grow

WTI oil continues its attempts to settle below the psychologically important support level at $80 as traders are worried about rising coronavirus cases in Europe.

Austria has recently decided to impose a lockdown for unvaccinated, and other European countries look ready to introduce additional virus containment measures which may have a negative impact on oil demand.

It should be noted that the recent pullback in the oil market did not put too much pressure on oil-related stocks, but it remains to be seen whether demand for energy stocks will stay strong in case WTI oil manages to settle below the important $80 level.

Gold Stays Strong As Traders Remain Focused On Inflation

Gold continues its attempts to get to the test of the $1875 level as traders remain focused on rising inflation in U.S.

The recent strength of the U.S. dollar had no impact on the gold market while rising Treasury yields did not put any pressure on precious metals.

Gold mining stocks gained strong upside momentum in recent trading sessions and look ready to continue their upside move as traders stay bullish on gold.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Futures Move Higher Amid Optimism In Infrastructure Stocks

Stocks Set To Open Higher

S&P 500 futures are gaining some ground in premarket trading while traders wait for additional catalysts which could push stocks to new highs.

S&P 500 moved from the 4350 level to the 4700 level without any pullback, and its RSI has entered into the overbought territory.

The strong earnings season provided significant support to stocks, while recent news on COVID-19 treatments from Merck and Pfizer pushed the market to new highs.

Over the weekend, the $1 trillion infrastructure bill has finaly passed the U.S. House of Representatives. Infrastructure-related stocks like Caterpillar or Deere are already moving higher in premarket trading, and this market segment will likely enjoy significant support today.

Gold Moves Towards $1830 As U.S. Dollar Retreats From Highs

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, failed to settle above the resistance near yearly highs at 94.50 and moved closer to the 94 level.

Weaker dollar provided support to gold, which managed to settle above the psychologically important $1800 level and moved closer to the resistance level at $1830.

In case gold manages to settle above the resistance at $1830, it will gain additional upside momentum and move towards the next resistance at $1845 which will be bullish for gold mining stocks.

WTI Oil Tries To Settle Above $82

WTI oil has recently made an attempt to settle above the 82 level as traders continued to bet on the recovery of oil demand.

The recent pullback was short-lived, and WTI oil quickly managed to find buyers below the $80 level. Energy-related stocks are trading close to yearly highs, and they will have a good chance to gain additional upside momentum during today’s trading session.

While crude inventories have been moving higher in recent weeks, the market looks focused on rising demand, infrastructure investments and the reopening of international travel in the U.S., which serve as bullish catalysts for oil.

For a look at all of today’s economic events, check out our economic calendar.

Earnings to Watch Next Week: Home Depot, Walmart, Target and Deere in Focus

Earnings Calendar For The Week Of August 16

Monday (August 16)

Ticker Company EPS Forecast
ATAI ATA -$0.18
FN Fabrinet $1.21
AG First Majestic Silver $0.09
TOELY Tokyo Electron Ltd PK $1.22

Tuesday (August 17)

IN THE SPOTLIGHT: HOME DEPOT, WALMART

HOME DEPOT: the largest home improvement retailer in the United States, is expected to report its second-quarter earnings of $4.42 per share, which represents year-over-year growth of about 10% from $4.02 per share seen in the same period a year ago.

The home improvement retailer would post revenue growth of nearly 7% to $40.68 billion. On average, Home Depot has beaten earnings estimates by more than 10% in the last four quarters.

“We are Overweight Home Depot (HD) given its best-in-class nature and structural housing tailwinds beyond N-T disruption from COVID-19. The stock seems attractively valued in the context of a potential 2H’20/2021 economic/housing boom,” noted Simeon Gutman, equity analyst at Morgan Stanley.

WALMART: The Bentonville, Arkansas-based retailer is expected to report its second-quarter earnings of $1.56 per share same as a year ago. However, the multinational retail corporation that operates a chain of hypermarkets’ revenue would decline over 1% to $135.9 billion. On average, the retail giant has beaten earnings estimates by over 17% in the last four quarters.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 17

Ticker Company EPS Forecast
AIT Applied Industrial Technologies $1.17
HD Home Depot $4.42
WMT Walmart $1.57
AMCR Amcor PLC $0.22
A Agilent $0.99
CDK Cdk Global $0.67
JKHY Jack Henry Associates $0.93
CREE Cree -$0.24

Wednesday (August 18)

IN THE SPOTLIGHT: TARGET

TARGET: One of the largest North American retailers offering customers both everyday essentials and fashionables, is expected to report its second-quarter earnings of $3.49 per share, which represents year-over-year growth of over 3% from $3.38 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 69%. The Minneapolis, Minnesota-based company would post year-over-year revenue growth of over 8% to $24.84 billion.

Walmart (WMT) & Target (TGT) likely to print upside given strong comp sales trends, a healthy consumer bolstered by child tax credits, & one of the best back to school seasons in retail. We prefer TGT given prospects of a greater beat and a lower relative valuation. We also enclose: Cowen’s Target x ULTA analysis, & our online grocery survey highlights WMT’s momentum. Raise TGT PT to $300 & maintain WMT’s $170 PT,” noted Oliver Chen, equity analyst at Cowen.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 18

Ticker Company EPS Forecast
LOW Lowe’s Companies $3.99
TGT Target $3.49
ADI Analog Devices $1.61
EAT Brinker International $1.71
TJX TJX Companies $0.58
VIPS Vipshop $2.32
YY YY -$0.60
NVDA Nvidia $1.02
KEYS Keysight Technologies $1.44
SNPS Synopsys $1.78
CSCO Cisco Systems $0.83
SQM Sociedad Quimica Y Minera De Chile $0.32
VNET 21Vianet -$0.06
TCEHY Tencent $0.52
MBT Mobile TeleSystems OJSC $20.23

Thursday (August 19)

IN THE SPOTLIGHT: KOHL’S

Kohl’s, the largest department store chain in the United States, is expected to report its second-quarter earnings of $1.17 per share, which represents year-over-year growth of over 565% from a loss of -$0.25 per share seen in the same period a year ago.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 19

Ticker Company EPS Forecast
KSS Kohl’s $1.17
TPR Tapestry Inc $0.68
EL Estée Lauder $0.51
M Macy’s $0.19
BJ BJs Wholesale Club Holdings Inc $0.63
MSGS Madison Square Garden Sports -$0.76
AMAT Applied Materials $1.77
ROST Ross Stores $0.97
FTCH Farfetch -$0.30
NCMGY Newcrest Mining Ltd PK $0.75
GFI Gold Fields $0.47

Friday (August 20)

IN THE SPOTLIGHT: DEERE

Deere & Company, the world’s largest maker of farm equipment, is expected to report its fiscal third-quarter earnings of $4.57 per share, which represents year-over-year growth of over 77% from $2.57 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the agricultural, construction, and forestry equipment manufacturer has delivered an earnings surprise of over 65%. The company forecasts net income for fiscal 2021 in the range of $5.3 billion to $5.7 billion, up from the previous projection of $4.6 billion to $5 billion, according to ZACKS Research.

Deere (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given a historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 20

Ticker Company EPS Forecast
DE Deere & Company $4.57
BKE Buckle $0.51
FL Foot Locker $0.97

 

Deere Could Hit New All-Time High on Strong Q3 Earnings; Target Price $421

Deere & Company, the world’s largest maker of farm equipment, is expected to report its fiscal third-quarter earnings of $4.57 per share, which represents year-over-year growth of over 77% from $2.57 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the agricultural, construction, and forestry equipment manufacturer has delivered an earnings surprise of over 65%. The company forecasts net income for fiscal 2021 in the range of $5.3 billion to $5.7 billion, up from the previous projection of $4.6 billion to $5 billion, according to ZACKS Research.

Deere shares have gained over 43% so far this year. The stocks traded 0.26% lower at $384.56 on Friday. But next week’s better-than-expected results could help the stock hit new all-time highs.

Analyst Comments

Deere (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given a historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

Deere Stock Price Forecast

Eleven analysts who offered stock ratings for Deere in the last three months forecast the average price in 12 months of $421.50 with a high forecast of $450.00 and a low forecast of $346.00.

The average price target represents a 9.61% change from the last price of $384.54. From those 11 analysts, eight rated “Buy”, two rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $442 with a high of $646 under a bull scenario and $209 under the worst-case scenario. The firm gave an “Overweight” rating on the farm equipment maker’s stock.

Several other analysts have also updated their stock outlook. Credit Suisse raised the target price to $439 from $427. JPMorgan lifted the target price to $346 from $330. UBS increased the target price to $391 from $360.

Check out FX Empire’s earnings calendar

Deere Shares Gain on Q1 Earnings Beat, Guidance Hike

Deere & Company shares jumped about 2% in pre-market trading on Friday after the world’s largest maker of farm equipment reported better-than-expected earnings in the fiscal second quarter and lifted its full-year guidance.

Agricultural, construction and forestry equipment manufacturer reported net income of $1.790 billion for the second quarter ended May 2, 2021, or $5.68 per share, compared with net income of $666 million, or $2.11 per share, for the quarter ended May 3, 2020. That was also higher than the market expectations of $4.49 per share.

The Moline, Illinois-based company said its worldwide net sales and revenues increased 30% to $12.058 billion for the second quarter of 2021 and rose 25% to $21.170 billion for six months.

Deere forecasts net income for fiscal 2021 is forecast to be in a range of $5.3 billion to $5.7 billion. Full-year earnings forecast raised to a range of $5.3 to $5.7 billion.

Following this, Deere shares rose about 2% to $361.0 in pre-market trading on Friday. The stock rose over 30% so far this year.

Analyst Comments

Deere’s (DE) F2Q continued to see a steady increase into today’s report. Still, today’s results and FY21 guidance were significantly ahead of expectations, and we believe the company’s operating leverage, the updated FY21 forecast and strong pricing should support the shares,” noted Stephen Volkmann, equity analyst at Jefferies.

“The real standout for us is pricing, where DE is the only company we follow driving significant price in the current tight market conditions.”

Deere Stock Price Forecast

Fourteen analysts who offered stock ratings for Deere in the last three months forecast the average price in 12 months of $408.64 with a high forecast of $455.00 and a low forecast of $365.00.

The average price target represents a 15.04% increase from the last price of $355.22. Of those 14 analysts, 12 rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $410 with a high of $625 under a bull scenario and $181 under the worst-case scenario. The firm gave an “Overweight” rating on the farm equipment maker’s stock.

Deere & Company (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given an historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

Several other analysts have also updated their stock outlook. Deere & Company had its price objective boosted by Robert W. Baird to $425 from $375. Robert W. Baird currently has an outperform rating on the industrial products company’s stock.

Stifel Nicolaus raised their price target to $365 from $325 and gave the stock a buy rating. Deutsche Bank raised their price target to $402 from $360 and gave the stock a hold rating.

Check out FX Empire’s earnings calendar

Deere Earnings to More Than Double in Q2 But Stock Has Limited Upside

Deere & Company, the world’s largest maker of farm equipment, is expected to report its fiscal second-quarter earnings of $4.49 per share, which represents year-over-year growth of over 112% from $2.11 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the agricultural, construction, and forestry equipment manufacturer has delivered an earnings surprise of over 60%. The Moline, Illinois-based company would post year-over-year revenue growth of over 28% to $10.5 billion.

The company forecasts net income for fiscal 2021 in the range of $4.6 billion to $5 billion, up from the previous projection of $3.6 billion-$4 billion.

But BMO Capital Markets analyst Joel Tiss downgraded the stock to market perform from outperform, stating that even a bullish scenario for the underlying business wouldn’t cause a big jump for the stock. Deere shares rose over 40% so far this year.

Deere Price Forecast

Sixteen analysts who offered stock ratings for Deere in the last three months forecast the average price in 12 months of $395.44 with a high forecast of $455.00 and a low forecast of $287.00.

The average price target represents a 3.57% increase from the last price of $381.80. Of those 16 analysts, 12 rated “Buy”, three rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $410 with a high of $625 under a bull scenario and $181 under the worst-case scenario. The firm gave an “Overweight” rating on the farm equipment maker’s stock.

Several other analysts have also updated their stock outlook. Deere & Company had its price objective boosted by Robert W. Baird to $425 from $375. Robert W. Baird currently has an outperform rating on the industrial products company’s stock.

Stifel Nicolaus raised their price target to $365 from $325 and gave the stock a buy rating. Deutsche Bank raised their price target to $402 from $360 and gave the stock a hold rating.

Analyst Comments

Deere & Company (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given an historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

Check out FX Empire’s earnings calendar

Earnings to Watch Next Week: Home Depot, Walmart, Target and Deere in Focus

Earnings Calendar For The Week Of May 17

Monday (May 17)

Ticker Company EPS Forecast
DM Dominion Midstream Partners -$0.10
RYAAY Ryanair -$2.04

Tuesday (May 18)

IN THE SPOTLIGHT: HOME DEPOT, WALMART

HOME DEPOT: The largest home improvement retailer in the United States is expected to report its first-quarter earnings of $3.06 per share, which represents year-over-year growth of about 47% from $2.08 per share seen in the same period a year ago.

The home improvement retailer would post revenue growth of 21% to $34.2 billion. In the last four quarters, on average, Home Depot has beaten earnings estimates about 2%.

The Atlanta, Georgia-based company’s shares rose over 20% so far this year. Home Depot’s better-than-expected results, which will be announced on Tuesday, could help the stock hit new all-time highs. But the stock’s performance could hinge on margins.

“We expect a 25% to 30% Q1’21 comp as top-line strength likely continued through the quarter. We model gross margin down 40 bps. For context, in Q4 lumber inflation pulled gross margin down ~30 bps and likely worsened sequentially. On SG&A, assuming the per sq ft 2-year stack holds from Q4 (+24%), SG&A should lever 360 to 400 bps,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“In our model, this combination produces EPS of $3.55 to $3.85 vs consensus at $2.95. While a ’21 guide was not provided, if the ’20 top-line exit rate held through ’21, HD would expect a flat to slightly positive comp and an EBIT margin of at least 14%.”

WALMART: The Bentonville, Arkansas-based retailer is expected to report its first-quarter earnings of $1.21 per share, which represents year-over-year growth of about 47% from $1.18 per share seen in the same period a year ago.

However, the multinational retail corporation that operates a chain of hypermarkets’ revenue would decline about 2% to $131.8 billion. In the last four quarters, on average, the retail giant has beaten earnings estimates about 9%.

“We raise 1Q22 EPS estimate to $1.23 from $1.22, on stronger Walmart U.S. comps, more modest SG&A deleverage, offsetting lower International segment revenues on divestitures, and remain above Street’s $1.21. We raise our Walmart U.S. comps to +0.5%, ahead of Street’s +0.3%, and our updated estimates now imply 2-year stack growth of +10.5% Y/Y, in-line with 4Q21,” noted Oliver Chen, equity analyst at Cowen.

“We expect a tailwind from stimulus, and improved apparel and other general merchandise categories, offset by grocery and other essential categories normalizing. Recall in 1Q21 Grocery improved +LDD, Health & Wellness +HSD, and General Merchandise +MSD.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MAY 18

Ticker Company EPS Forecast
HD Home Depot $3.06
WMT Walmart $1.21
SE Spectra Energy -$0.45
NTES NetEase $6.35
BZUN Buzzi Unicem RSP $0.60
M Macy’s -$0.39
DQ Daqo New Energy $1.18
BIDU Baidu $10.63
KC Kutcho Copper -$0.16
STE Steris $1.79
TTWO Take Two Interactive Software $0.68
TCOM Trip.com Group Ltd -$2.05
JHX James Hardie Industries $0.29
TTM Tata Motors $0.47
MBT Mobile TeleSystems OJSC $19.37
AAP Advance Auto Parts $3.08
DY Dycom Industries $0.13
ASND Ascendant Resources -$2.06

Wednesday (May 19)

IN THE SPOTLIGHT: TARGET CORP

Target, one of the largest North American retailers offering customers both everyday essentials and fashionables, is expected to report its first-quarter earnings of $2.16 per share, which represents year-over-year growth of over 266% from $0.59 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 60%. The Minneapolis, Minnesota-based company would post year-over-year revenue growth of over 9% to $21.51 billion.

Target’s better-than-expected results, which will be announced on May 19, would help the stock hit new all-time highs. Target shares rose over 19% so far this year.

“We raise 1Q21 EPS to $2.18E, ahead of Street’s $2.10 as we raise our comps estimate to+11.5%, and tweak margin assumptions. We now model comps +11.5%, yielding 2-year stack growth of +22.3%, accelerating sequentially by +30bps,” noted Oliver Chen, equity analyst at Cowen.

“We are ahead of Street’s+8.2% consensus estimate, and think our estimates could ultimately prove conservative as Target’s (TGT) category portfolio should see the retailer benefit from the stimulus, improving trends in apparel and other re-opening categories, along with continued strength in-home, which will more than offset normalizing food, essentials, and other category comps.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MAY 19

Ticker Company EPS Forecast
VIPS Vipshop $2.19
JD JD.com $2.29
LOW Lowe’s Companies $2.59
CAE Cae USA $0.16
ADI Analog Devices $1.45
TGT Target $2.16
TJX TJX Companies $0.30
EXP Eagle Materials $1.23
RXN Rexnord $0.45
KEYS Keysight Technologies $1.33
CSCO Cisco Systems $0.82
LB L Brands $1.15
SNPS Synopsys $1.53
SQM Sociedad Quimica Y Minera De Chile $0.25
YY YY -$0.39
CPRT Copart $0.80
OMVJF OMV $0.97

Thursday (May 20)

Ticker Company EPS Forecast
MNRO Monro Muffler Brake $0.29
KSS Kohl’s $0.06
BRC Brady $0.65
RL Ralph Lauren -$0.75
HRL Hormel Foods $0.41
BJ BJs Wholesale Club Holdings Inc $0.56
PANW Palo Alto Networks $1.28
ROST Ross Stores $0.88
FLO Flowers Foods $0.40
AMAT Applied Materials $1.51
DECK Deckers Outdoor $0.67
TCEHY Tencent $0.54
TBLMY Tiger Brands Ltd PK $0.34

Friday (May 21)

IN THE SPOTLIGHT: DEERE & COMPANY

Deere & Company, the world’s largest maker of farm equipment, is expected to report its fiscal second-quarter earnings of $4.49 per share, which represents year-over-year growth of over 112% from $2.11 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the agricultural, construction, and forestry equipment manufacturer has delivered an earnings surprise of over 60%. The Moline, Illinois-based company would post year-over-year revenue growth of over 28% to $10.5 billion.

Deere’s better-than-expected results, which will be announced on Friday, would help the stock hit new all-time highs. Deere shares rose over 42% so far this year.

Deere & Company (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given an historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MAY 21

Ticker Company EPS Forecast
ROLL Rbc Bearings $1.05
DE Deere & Company $4.49
BKE Buckle $0.29
BAH Booz Allen Hamilton $0.84
VFC VF $0.28
FL Foot Locker $1.06