5 stocks to watch for next week
Qualcomm eyes the future of wireless communication, Coinstar takes on Netflix, while FedEx, Bed Bath & Beyond, and FactSet are set to report earnings.
By Bruce Frey II, InvestorsObserver
1) FedEx delivers Q2 earnings Wednesday
What's happening: Federal Express (FDX) will deliver its earnings for the fiscal second quarter of 2013 on Wednesday before the market open. Analyst estimates for per share earnings run from a low of $1.32 to as high as $1.48 with the consensus estimate coming in at earnings of $1.41 per share. Year-over-year, this represents a decline of more than 10% from the $1.51 reported in the same quarter of last year. During the past three months, per share earnings estimates have fallen from $1.67, although they have held steady at $1.41 in the past two months. Revenue, on the other hand, is expected to show a small increase, coming in at $10.84 billion, a 2.4% increase. On an annual basis, analysts are looking for earnings of $6.41 per share on revenue of $43.96 billion.
Technical analysis: FDX was recently trading at $89.92, up $0.21. The technicals for FDX are bearish with a possible trend reversal and the stock has been under accumulation with support above $88.65 and resistance below $89.91. Of the 20 analysts who cover the stock 13 rate it a "strong buy," one rates it a "buy," and six rate it a "hold." The stock receives Standard & Poor's 5 STARs "strong buy" ranking.
Analysts' thoughts: FedEx presents a strong financial picture with a large number of positive fundamental comments. The stock appears to be appropriately valued and further price appreciation is likely. The company's profit improvement program, which seeks to add $1.7 billion to operating income by fiscal 2016, appears to be on track with up to 75% of the target expected to be achieved by fiscal 2015. This is a realistic goal combining cost savings, efficiency improvements and incremental revenue generating concepts. FedEx is expected to benefit from improvement in the U.S. and global economy over the next year, which should lead to increased volumes across its entire network. Shares will benefit from increased investor interest in logistics stocks on concrete signs of economic improvement. Recently price momentum has strengthened and the stock has outperformed the market as measured by the S&P 500. As long as the positive fundamental outlook does not change investors should recognize this strength and the stock should be a strong performer over the intermediate term.
2) Qualcomm to invest in new technologies
What's happening: In a recent interview, Qualcomm's (QCOM) chief executive officer, Paul Jacobs, said the company is planning to invest in new mobile technologies, including small home equivalents of cellular broadcast towers. This will help to ease congestion on carriers' networks and smartphones that link with sensors in homes, cars, stores and medical devices. Qualcomm receives a patent royalty on just about every handset that uses third-generation or later cellular technology. Apple (AAPL) iPhone 5, for example, communicates with Qualcomm chips as do most smartphones that use the speedy technology known as LTE. That has helped Qualcomm amass $26.8 billion in cash and marketable securities and a $105 billion market capitalization that recently topped Intel (INTC) as the biggest in the semiconductor sector.
Technical analysis: QCOM was recently trading at $62.76, down $0.73. The technicals for QCOM are bullish with a weak upward trend and the stock has been under accumulation with support above $63.33 and resistance below $64.24. Of the 34 analysts who cover the stock 27 rate it a "strong buy," four rate it a "buy," and three rate it a "hold." The stock receives Standard & Poor's 5 STARs "strong buy" ranking.
Analysts' thoughts: Qualcomm has a large number of positive fundamental factors giving it very strong financial picture at the current time. The stock appears to be fairly valued when compared to other stocks in it industry although price appreciation remains possible. The company is expected to see strong chipset sales throughout the coming year as the economy begins to improve along with the rapid growth in the smartphone market. The popularity of Qualcomm's Snapdragon chipset will give it an advantage as media-centric wireless devices continue to be popular. Strong price momentum has allowed the stock to outperform the overall market as measured by the S&P 500. The stock should be a strong performer over the intermediate term so long as the financial picture does not change.
3) Bed Bath & Beyond draws Q3 earnings Wednesday
What's happening: Bed Bath & Beyond (BBBY) will step into the earnings confessional after the market close on Wednesday. Analysts estimates for earnings range from a low of 99 cents per share to a high of $1.06 per share with the consensus ringing in at $1.02 per share, a 7.3% increase from the 95 cents per share reported in the previous year's third quarter. Revenue for the retailer is expected to show a significant increase with a reading of $2.73 billion for the quarter. A 16.7% above the $2.34 billion in revenue reported in the previous year's third quarter. For the year analysts expect the company to report earnings of $4.62 per share on revenue of $10.96 billion.
Technical analysis: BBBY was recently trading at $58.16, down $0.02. The technicals for BBBY are bullish with a possible trend reversal and the stock has been under distribution with support above $57.63 and resistance below $58.39. Of the 20 analysts who cover the stock 14 rate it a "strong buy," five rate it a "hold," and one rates it a "sell." The stock receives Standard & Poor's 4 STARs "buy" ranking.
Analysts' thoughts: The fundamentals for Bed Bath & Beyond are indicative of a company with a strong financial base. The stock is slightly overvalued at this juncture when compared to other stocks in its industry group but possibly may experience further price appreciation. Look for continued market share gains, with better merchandising and execution than peers. Despite continued expected economic malaise, sales of soft goods will likely remain relatively strong as consumers look for ways to spruce up their homes in a low-cost manner. Price momentum is strong and the stock has outperformed the market when compared to the S&P 500. As long as the positive fundamental outlook does not change, this stock should be a strong performer over the intermediate term.
4) Video streaming next venture for Coinstar
What's happening: Coinstar (CSTR) and Verizon Communications (VZ) said they will launch a video streaming service later this month in an effort to take on video rental giant Netflix (NFLX). The companies are set to launch their Redbox Instant video streaming service more than ten months after they first inked a joint venture. The new service, Redbox Instant by Verizon will launch as a public beta later this month, the companies said in a statement. The service, which combines the Redbox DVD rental kiosk business with an Internet video offering from Verizon, will sell subscriptions starting at $8 per month for unlimited streaming combined with four one-night credits for DVDs. Redbox Instant would also offer a $9 unlimited streaming option that would allow users to rent Blu-ray discs.
Technical analysis: CSTR was recently trading at $51.87, down $0.09. The technicals for CSTR are bullish with a weak upward trend and the stock has been under accumulation with support above $49.65 and resistance below $52.55. Of the 15 analysts who cover the stock ten rate it a "strong buy" and five rate it a "hold."
Analysts' thoughts: The financial picture for Coinstar is very strong with the positive fundamental factors far outweighing the negatives. The stock appears fairly valued when compared to other stocks in its industry group and the company's management seems to be effectively allocating total resources to generate profits for the company when compared to industry averages. The company is seen adding market share with the addition of high-quality/high-foot traffic at Publix and Safeway (SWY) supermarket locations as part of the acquisition of NCR's (NCR) Blockbuster Express. Additional market share grab should result from continued closures of Blockbuster and other bricks-and-mortar video rental outlets as well as the fourth quarter 2012's addition of Redbox gift cards. Price momentum is strong and the stock has outperformed the market when compared to the S&P 500. As long as the positive fundamental outlook does not change, Coinstar still has room to grow as a provider of low-cost entertainment to the nation's movie watchers.
5) FactSet Research Systems will reveal Q1 results
What's happening: FactSet Research Systems (FDS) will unveil its latest earnings on Tuesday before the market open. The average analyst estimate is for profit of $1.11 per share, representing a rise of 8.8% from the company's actual earnings for the year-ago quarter of $1.02. The average estimate is the same as three months ago. Between one and three months ago, the average estimate was unchanged and it also has not changed during the last month. Analysts predict a rise of 8% in revenue from the year-earlier quarter to $212.3 million. On an annual basis analysts are projecting earnings to rise by 11.9% compared to last year's with a reading of $4.61 per share on annual revenue of $874.81 million.
Technical analysis: FDS was recently trading at $94.05, down $0.32. The technicals for FDS are bullish with a possible trend reversal and the stock has been under accumulation with support above $92.69 and resistance below $95.95. Of the eight analysts who cover the stock one rates it a "buy" and seven rate it a "hold." The stock receives Standard & Poor's 3 STARs "hold" ranking.
Analysts' thoughts: A review of the fundamental factors for FactSet reveals a company with a mixed financial picture. The stock represents a good value when compared to other stocks in its industry group and appears likely to experience further price appreciation. The company has a strong position in a niche market with significant barriers to entry. FactSet's client count is expected to trend upward for the foreseeable future. The buy-side remains a source of growth, and sell-side conditions are improving modestly as economic conditions strengthen and M&A and IPO activity remain at relatively healthy levels. Analysts think the company is better positioned than in prior cycles due to a broader and more proprietary product offering. Price momentum has recently weakened and the stock has underperformed the market when compared to the S&P 500. This combination of current conditions should provide an opportunity for price appreciation for FactSet. Should the fundamental picture improve, the possibility of additional price appreciation will also increase.
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Bruce Frey does not have direct ownership in any of the stocks mentioned today.
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