Another exciting trading week has just started. The market will see a busy earnings season with reports from major companies such as Microsoft, Johnson & Johnson, Tesla, AT&T, Verizon, Boeing, IBM, Visa, and Mastercard. Additionally, Tuesday will see the S&P Global Composite PMI release for January. Look at the TOP3 stocks to trade this week (January 16-23, 2023)!
The Bureau of Economic Analysis will release the advance estimate for the fourth-quarter GDP on Thursday. On Friday, the Personal Consumption Expenditures Price Index for December. Updates on the housing market, including new and pending home sales for December, will also be released. Look at the TOP3 stocks to trade this week (January 16-23, 2023).
Microsoft will be publishing its financial results on Tuesday after the market closes. The company has been experiencing a slowdown in revenue and earnings growth, with quarterly earnings declining year-on-year in the quarter that ended September 2022. The consensus estimate for EPS for the quarter ending December is $2.32, reflecting a 6.5% decline from the $2.48 reported a year earlier. Wall Street expects $53.2 billion in revenue, a 3% year-on-year increase, and record quarterly sales.
Investors will be closely watching the company’s guidance for the next few years to gauge the sustainability of the valuation. Long-term, investors will also be focused on more qualitative factors and strategies.
Microsoft has announced plans to lay off some 10,000 workers this month and experienced a loss of $737 billion in market value in the past year, ranking it as the third-highest loss among S&P 500 companies. Azure cloud-computing offering may be holding up better than rivals, and expect to hear about it when Microsoft results hit Tuesday afternoon.
Tesla’s 4th quarter financial results will be published on Wednesday. Investors will be looking for more information about the company’s performance following a challenging year for the electric vehicle maker. The company’s stock suffered a much more significant percentage decline than other major companies in 2022. Tesla closed out the year with its worst quarter and month ever. To reinvigorate demand, Tesla began cutting prices in China and the U.S., which could lead to questions about previously high margins. Analysts will be looking for more context on the production of the Cybertruck, demand in China, competition, and the impact of price cuts.
While the price cut may hurt profit, some analysts see it as a bold move that secures Tesla’s volume growth and showcases Tesla’s considerable pricing power and cost superiority. With Tesla’s stock currently performing poorly, some analysts have suggested a share buyback as a potential strategy to attract investor attention. CEO Elon Musk discussed such a plan in the previous earnings call. Still, investors worry his heavy selling of Tesla shares and purchase of Twitter has distracted him from the automaker’s needs.
Mastercard Incorporated (NYSE: M.A.) is set to publish its financial results on Thursday. The company has been a dominant player in the credit card market for several years. It also remains relatively unaffected by external challenges. The rapid rise in digital transactions during the COVID era has substantially expanded the usage of credit card services. The adoption of credit card services significantly brought new security risks that need practical solutions. Mastercard has an impressive track record of creating sustainable shareholder value. Typically, the stock regains momentum quickly after every fall, making it a reliable investment option.
The stock is currently on an upward spiral and on track to return to the all-time highs of early last year. Some may consider the stock expensive, but Mastercard’s business is primarily constant. It is because of the ease and cash-substituting nature of credit cards. Consumers and businesses are becoming accustomed to the advantages of credit cards, expecting demand to rise. Furthermore, because Visa and Mastercard each have a sizably large number of users and merchants in their respective networks, and because the industry is expanding, both companies compete.
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