Stocks To Watch: Eyes On CPI Nail-Biter, SVB Blowback And Earnings From FedEx, XPeng & Dollar General

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The week ahead is expected to see more drama over the collapse of SVB Financial Group (NASDAQ:SIVB) and the implications for the banking sector and venture capital ecosystem. Economic releases will also dominate the conversation about stocks next week with the next Federal Reserve meeting rapidly approaching. The headliner will be the consumer price index report for February with a slight moderation in the year-over-year inflation rate to +5.5% to +5.6%. Meanwhile, producer prices are forecast to decelerate to a 0.3% month-over-month gain from 0.7% in January. Updates on the Empire Manufacturing Survey and latest retail sales are both anticipated to show an economic slowdown, while industrial production is forecast to see a bump higher and the Philadelphia Fed Business Outlook is seen improving. The upshot is that reports together should be the swing factor on whether the Federal Reserve looks to raise its benchmark interest rate by 25 points or 50 points at the FOMC meeting on March 21-22. Outside of the Fed drama, FedEx (FDX) is the big heavyweight earnings report of the week with the shipping giant’s forecast holding sway over a number of sectors. Other key earnings reports out during the week will include updates from Adobe (ADBE), Dollar General (DG), Lennar (LEN) and XPeng (NYSE:XPEV). On Seeking Alpha, contributor Richard Durant has his eyes on Oatly (NASDAQ:OTLY) and the potential for an upside surprise. On the event calendar, a Microsoft (NASDAQ:MSFT) event on AI in the workplace will catch some attention. While the integration of ChatGPT-like AI into Office apps like Teams, Word, and Outlook will create some buzz, Seeking Alpha contributor Pioneering Ideas reminded that it is still too small of an opportunity to move the needle for the tech giant in the near term. https://seekingalpha.com/article/4584581-breaking-down-generative-ai-microsoft-music-plays-elsewhere-than-in-search.

Earnings spotlight: Monday, March 13 – GitLab (GTLB).

Earnings spotlight: Tuesday, March 14 – Lennar (LEN), Smartsheet (NYSE:SMAR), and Guess (GES).

Earnings spotlight: Wednesday, March 15 – Adobe (ADBE) and Five Below (FIVE).

Earnings spotlight: Thursday, March 16 – FedEx (FDX), Dollar General (DG), and Signet Jewelers (SIG).

Earnings spotlight: Friday, March 17 – XPeng (XPEV).

Volatility watch: Options trading is high again on Mullen Automotive (MULN) and Altimmune (ALT), while Edible Garden AG (NASDAQ:EDBL) and Arcutis Biotherapeutics (NASDAQ:ARQT) are near the top of the list of stocks with the highest percentage of short interest outstanding. Southwest Airlines (LUV) is also on the watch list with the airline company expected to provide an update on Q1 business trends.

Dividend watch: Companies forecast to boost their quarterly dividend payouts include Signet Jewelers (SIG) to $0.22 from $0.20, First Bancorp (NASDAQ:FBNC) to $0.24 from $0.22, Dollar General (DG) to $0.60 from $0.55, TE Connectivity (TEL) to $0.60 from $0.56, and Qualcomm (QCOM) to $0.80 from $0.75.

FedEx earnings preview: FedEx (FDX) will get heavy exposure this week with its earnings report offering more insight into the state of the U.S. economy. The shipping giant is expected to report revenue of $22.7B and EPS of $2.74. Ahead of the earnings print, Goldman Sachs reiterated a buy rating on FedEx. “While there remains near-term risk, we continue to believe that should the economy indeed begin a bottoming process over 1H2023, FDX is well positioned to take eventual volume growth and drive it over their relatively high fixed cost Express network to improve margin as it has done in prior cycles,” updated the firm. Morgan Stanley is more cautious with the stock up +15% year-to-date and 26% higher since the FQ2 earnings beat. “We believe a big chunk of this outperformance may be driven by a broad expectation that China reopening could be tailwind to numbers and excitement/short covering driven by potential upcoming cost actions,” noted MS. The view is that optimism may be overdone and the real questions are how much dry powder remains for FDX and what is the underlying earnings power of the business. FedEx has topped revenue expectations in five straight quarters and EPS marks in four of the last five quarters.

CPI preview: The highly-anticipated February consumer price index report will be released on March 14. Economists forecast a 0.4% month-over-month rise in the inflation gauge. The year-over-year rate is expected to drop to +6.1% from +6.4%. Core CPI is seen rising 0.4% month-over-month or 5.5% year-over-year. Bank of America warned that risk is tilted to an upside surprise due in part to the recent gains in the Manheim used vehicle index. The firm expects food inflation will print at 0.5% M/M, in line with its recent trend over the last three months. Energy prices are seen falling by 0.4% M/M due to a decline in energy services, which should offset a modest increase in energy commodities. Core services prices are forecast to rise by 0.5% M/M, with shelter inflation the main driver. The bias heading into the report may be that investors are concerned that the Fed could over-tighten and cause a recession. Janney Montgomery Scott warned banks, in particular, could feel even more pain after the Silicon Valley Bank (SIVB) meltdown with an element of ‘sell-first ask questions later’ in regard to contagion risk.

Corporate events: The most closely watched event of the week may be the AMC Entertainment (AMC) shareholder vote on the conversion of AMC Preferred Equity Units (APE) into common shares. The vote will occur on March 14 and be followed by an injunction hearing on April 27. Allegro MicroSystems (NASDAQ:ALGM) will host the first Analyst Day in the company’ history on March 14. The Analyst Day will include expanded insights into Allegro’s strategy, technology and innovation, as well as its focus on high-growth end markets. The company will share an updated financial model as well as product demos showcasing its industry-leading magnetic sensor and power ICs. Other key events include the Verisk Analytics (NASDAQ:VRSK) Investor Day and LSB Industries (LXU) investor day for institutional investors and research analysts. Parsons (NYSE:PSN) and Airgain (NASDAQ:AIRG) have investors events on March 15. Microsoft (MSFT) will hold a special event on March 16 where CEO Satya Nadella and other execs will detail the future of work with AI. The event will include demonstrations on how tech giant’s ChatGPT-like AI will work in Office apps like Teams, Word, and Outlook. Microsoft recently integrated its artificial intelligence-powered Bing search engine into its Windows 11 operating system.

Quant ratings: Stocks with recent quant rating upgrades include SunCoke Energy (NYSE:SXC) and Nestle S.A. (OTCPK:NSRGY) to Strong Buy from Hold, ImmunoGen (IMGN) to Buy from Hold, and Momentus (NASDAQ:MNTS) to Sell from Hold. See the stocks with the very highest rated Seeking Alpha Quant Ratings.

Notable conferences: The JPMorgan Industrials Conference is the headlines of the week with appearances expected from Delta Air Lines (DAL), Southwest Airlines (LUV), Honeywell (HON), Lockheed Martin (LMT), United Airlines (UAL), and Rockwell Automation (ROK). The conference has been used before by airline companies to update full-year guidance. Other conferences to watch include the Loop Capital Investor Conference, Oppenheimer 33rd Annual Healthcare Conference, Bank of America 2023 Consumer & Retail Conference, Barclays Global Healthcare Conference, UBS Global Consumer and Retail Conference, and Citi 2023 Global Consumer Conference.

Barron’s mentions: The collapse of the SVB Financial Group (SIVB) captured a lot of attention with investors worried about a contagion effect. The view is that investors may have a buying opportunity with big bank stocks. “We believe the selloff was overdone as large banks have a lot more liquidity than smaller banks, they are more diversified with broader business models, have a lot of capital, are much better managed in regards to risk, and have a lot of oversight from regulators,” noted J.P. Morgan analyst Vivek Juneja. Larger banks like Bank of America (BAC), JPMorgan (NYSE:JPM), and Wells Fargo (WFC) are noted to have diversified client bases and strong funding sources. The cover story this week delves into the struggle of Salesforce (NYSE:CRM) to recapture sales growth. A wave of activist investors on the scene is expected to help push the tech company in the right direction. BorgWarner (BWA), Crane Holdings (CR), Johnson & Johnson (JNJ), and Kellogg (K) were all singled out for having spinoffs planned this year. The newly formed stocks could be of interest with the historical record showing that 55% of the 377 completed U.S. spinoffs since 1999 outperformed their parents’ share price performance by a healthy margin in the year following the split.

Sources: EDGAR, Bloomberg, CNBC, Reuters

Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.