How are energy investors positioned?
- PCE inflation data, Nvidia earnings will be in focus this week.
- Snowflake is a buy with strong earnings, guidance beat on deck.
- Kohl’s’ continued sales decline, disappointing outlook make it a stock to sell.
- Looking for actionable trade ideas? Subscribe now to unlock access to InvestingPro’s AI-selected stock winners for up 50% off amid the summer sale!
The stock market soared on Friday, with the blue-chip Dow hitting a record closing high, after Federal Reserve Chair Jerome Powell pointed to a possible rate cut at the central bank’s next policy meeting in his remarks at the Jackson Hole Symposium.
The "shifting balance of risks may warrant adjusting our policy stance," Powell said, taking note of recent softness in the labor market.
Source: Investing.com
Despite Friday’s rally, Wall Street’s main indexes closed mixed for the week. The Dow Jones Industrial Average rose 1.5%, the S&P 500 gained 0.3%, while the tech-heavy Nasdaq Composite shed 0.6%. The small-cap Russell 2000 jumped 3.3%.
More volatility could be in store in the week ahead as investors assess the outlook for the economy, inflation, interest rates and corporate earnings amid ongoing trade tensions.
On the economic calendar, most important will be Friday’s core PCE price index, which is the Fed’s favorite inflation gauge. That will be accompanied by the latest consumer confidence reading, as well as fresh housing data.
Source: Investing.com
Elsewhere, in corporate earnings, Nvidia (NASDAQ:NVDA)’s results will be the key update of the week as the reporting season draws to a close. Other notable names include CrowdStrike (NASDAQ:CRWD), Snowflake (NYSE:SNOW), Okta (NASDAQ:OKTA), Dell (NYSE:DELL), HP (NYSE:HPQ), Best Buy (NYSE:BBY), Dollar General (NYSE:DG), Kohl’s (NYSE:KSS), Burlington Stores (NYSE:BURL), Ulta Beauty (NASDAQ:ULTA), Dick’s Sporting Goods (NYSE:DKS), Gap (NYSE:GAP), Abercrombie & Fitch (NYSE:ANF), Alibaba (NYSE:BABA), and Li Auto (NASDAQ:LI).
Regardless of which direction the market goes, below I highlight one stock likely to be in demand and another which could see fresh downside. Remember though, my timeframe is just for the week ahead, Monday, August 25 - Friday, August 29.
Stock To Buy: Snowflake
Snowflake is positioned for a potential positive catalyst when it releases its Q2 earnings report on Wednesday at 4:05PM ET. Analysts expect the AI data cloud company to demonstrate solid profit and sales growth, driven by continued customer acquisition and revenue expansion, as organizations seek scalable and flexible data solutions.
Market participants predict a sizable swing in SNOW stock after the update drops, as per the options market, with a possible implied move of +/-11.5% in either direction.
Sentiment has been notably positive heading into the print. According to InvestingPro data, earnings estimates have been revised upward 24 times, compared to 12 downward revisions. TD Cowen, KeyBanc, and UBS have all reiterated bullish stances ahead of earnings, expecting Snowflake to beat or at least meet guidance.
Source: InvestingPro
Consensus calls for Snowflake to post adjusted earnings per share of $0.27, climbing 42.1% from EPS of $0.19 in the year-ago period. Revenue is seen rising 25.6% to $1.09 billion, reflecting the company’s ability to capture market share in a high-growth industry.
Snowflake has been capitalizing on the global transition to cloud-based data analytics, garnering increasing demand for its platform that empowers businesses to manage and analyze vast amounts of data seamlessly. The integration of artificial intelligence and machine-learning capabilities into its platform positions it at the epicentre of the AI boom.
Given these dynamics, Snowflake’s management is likely to provide strong sales guidance for the current quarter as it benefits from the robust upward trend in AI adoption rates, customer retention, and strategic growth initiatives, such as collaborations with Microsoft (NASDAQ:MSFT), ServiceNow (NYSE:NOW), and Amazon’s AWS.
Source: Investing.com
SNOW stock ended Friday’s session at $196.81. Technical analysis paints a bullish short-term picture: SNOW’s 1-hour signals are overwhelmingly “strong buy” on indicators and “buy” on moving averages. RSI sits at 40.4 (not oversold), and volatility is high but manageable for a tech name—33.1% (90-day).
Additionally, InvestingPro’s AI-powered models rate Snowflake with a “FAIR” Financial Health Score of 2.44, reflecting its strong growth metrics and efficient operations.
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Stock to Sell: Kohl’s
Kohl’s, on the other hand, is a stock to avoid this week as it faces a challenging retail landscape. The mid-tier department store is facing a formidable set of headwinds that are likely to result in a downbeat earnings report and a cautious outlook.
The company, which operates over 1,100 stores across the U.S., is scheduled to release its second quarter earnings before the U.S. market opens on Wednesday at 7:00AM ET. With implied volatility pointing to a +/-15.1% stock move post-earnings, the risk of a miss looms large.
Analyst sentiment has deteriorated significantly ahead of the report, with InvestingPro data showing nine out of the 12 analysts covering Kohl’s reducing their profit estimates.
Source: InvestingPro
Wall Street sees Kohl’s reporting earnings of $0.30 per share, tumbling 49.1% from a year earlier, while revenue is anticipated to decline by 5.7% to $3.3 billion. These figures reflect ongoing difficulties in a sector battered by shifting consumer preferences and economic pressures.
The brick-and-mortar retailer is grappling with operational inefficiencies and weakening consumer demand, particularly for discretionary items like the apparel, home goods, and accessories that are the bread and butter of Kohl’s’ business.
This dynamic places Kohl’s in a precarious position in the retail landscape—the "murky middle." It lacks the rock-bottom prices of a value leader like Walmart (NYSE:WMT) and doesn’t have the brand cachet of more premium retailers. Adding to these woes is intense competition from all sides, including online giants like Amazon (NASDAQ:AMZN), off-price retailers like TJX Companies (NYSE:TJX), and fast-fashion players.
Given these challenges, Kohl’s faces a very tough path ahead, with little near-term relief expected from its upcoming earnings report.
Source: Investing.com
KSS stock closed at $13.89 on Friday. Shares have underperformed the S&P 500 in the year-to-date, reflecting mounting investor concerns about Kohl’s long-term prospects as it struggles to adapt to the evolving retail landscape.
It should be noted that Kohl’s has an InvestingPro Financial Health Score of 2.16, tagged as ‘FAIR’, highlighting the company’s difficulty in attracting customers and driving sales.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF (SPY), and the Invesco QQQ Trust ETF (QQQ). I am also long on the Invesco Top QQQ ETF (QBIG), Invesco S&P 500 Equal Weight ETF (RSP), and VanEck Vectors Semiconductor ETF (SMH).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.