U.S. equities closed with a mixed picture last Friday, marking the fifth consecutive record high for the . This surge comes as investors remain vigilant, pondering the Federal Reserve’s possible rate cut. In contrast, the slid 0.5%, while the tech-heavy Nasdaq enjoyed a 3.2% leap throughout the week.
This upcoming week, with Wall Street observing Juneteenth on Wednesday, is anticipated to be loaded with action as market participants deliberate the longevity of the AI-driven ascent and the Fed’s stance on interest rates.
Especially critical is Tuesday’s release of the U.S. retail sales report for May. Analysts predict a slight uptick for the month. This data release coincides with a series of speeches by various Fed governors like Lisa Cook, Thomas Barkin, and Adriana Kugler, collectively reinforcing the likelihood of a September rate cut.
On the earnings front, eyes are set on updates from Lennar, KB Home, Darden Restaurants, and Kroger.
Irrespective of market direction, let’s delve into one stock destined for demand and another potentially facing a downward trajectory in the forthcoming week, from Monday, June 17, to Friday, June 21.
Potential Winner: Hewlett Packard Enterprise
The week ahead appears promising for Hewlett Packard Enterprise(NYSE:) as the firm prepares to host the eagerly awaited ‘HPE Discover summit’. Anticipated to unveil the latest in edge-computing and AI advancements, this four-day event kicks off Monday at the Venetian Convention and Expo Center, Las Vegas.
Attention is likely to be on CEO Antonio Neri’s keynote on Tuesday, scheduled at 12:00PM EST / 9:00AM PDT at the Sphere, where he shares the stage with Nvidia (NASDAQ:) CEO Jensen Huang.
The duo is set to showcase leading strategies and offer insights into emerging trends spanning edge & networking, hybrid cloud, and artificial intelligence.
Other HPE executives, including CTO Fidelma Russo, are expected to reveal the latest news, partnerships, and innovations from HPE and its global customer base.
Traditionally, Hewlett Packard Enterprise shares rally during the week of its annual ‘Discover’ event. The company, known for attracting numerous analyst upgrades post-summit presentations, wrapped up Friday’s session at a fresh 52-week peak of $21.60, evidencing a robust rally since the start of the year, reflecting a 27% gain.
HPE boasts an above-average Financial Health Score of 2.9 out of 5.0, per ProTips, supported by healthy profitability and solid sales growth forecasts.
Potential Loser: Kroger
Conversely, Kroger seems poised for a turbulent week with an anticipated bleak performance. The supermarket giant’s forthcoming earnings are likely to unveil a stark deceleration in both profit and sales growth, influenced by the unpredictable macro climate.
The Ohio-based company is set to disclose its first-quarter update pre-market on Thursday, projecting an earnings per share decline to $1.36, 9.9% lower than the year-ago figure, due to rising operating costs and fierce competition from industry giants.
Analyst revisions suggest a downturn in sentiment, with all four analysts covering Kroger slashing estimates over the past 90 days. Market participants foresee a substantial movement in KR stock post-update, with an estimated 6% swing either way.
With revenue expected to dip 0.3% to $45.09 billion, Kroger’s management is likely to offer underwhelming guidance due to shrinking operating margins and reduced customer footfall amidst prevailing economic conditions.
At Friday’s close, KR stock stood at $50.38, a level not seen since March 6, with a market cap of $36.3 billion, making it the nation’s largest supermarket chain.
While the broader market surged 14% year-to-date, Kroger’s shares lagged with a 10.2% rise in 2024.
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*The views expressed herein belong to the author and do not constitute investment advice.