3 Things to Watch in the Stock Market This Week
Stocks fell last week, as both the S&P 500 (SNPINDEX: ^GSPC) and the Dow Jones Industrial Average (DJINDICES: ^DJI) shed roughly 2%. The indexes are still in positive territory for the year, but gains are at less than 2% in 2021.
Earnings season continues in the week ahead, with several top stocks set to announce fresh operating results. We'll look at the metrics that could send shares of Costco (NASDAQ: COST), Target (NYSE: TGT), and Ambarella (NASDAQ: AMBA) moving over the next few trading days.
Costco's renewal rates
Investors are expecting plenty of good news in Costco's Thursday report, which covers the peak holiday shopping season. That's partly because the bulk retailer already signaled strong sales for the period by revealing
Costco will probably beat its rival on the sales growth front this week, but investors will also be watching customer traffic, which has risen through most of the year as shoppers have consolidated their trips during the pandemic. The warehouse giant will also announce its latest renewal rate, the single best metric to describe the health of the business. Assuming that rate holds at near-record highs of 91%, Costco will be in a strong position to continue winning market share in 2021 while considering another annual membership-fee hike.
Target's margin outlook
Target has been another big winner from pandemic-related spending shifts, and that has shareholders feeling optimistic heading into Tuesday's earnings report. Its holiday-season update already showed market-thumping sales growth of
Investors are questioning whether the good times can last into 2021, though, especially after Walmart predicted several years of elevated spending and rising costs ahead. Target's continued stock-price rally might depend on its ability to keep boosting operating margin even as it invests in the business.
Ambarella's growth forecast
It's time for Ambarella to start showing concrete signs of a rebound. The video tech producer's
That success would mark just the first step in a
Accelerating sales growth is the best way to show that these products are resonating with suppliers. And rising profitability should follow any demand uptick, leading to impressive earnings growth over time. But heading into this report, both of these core ingredients are missing from Ambarella's investing story.
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