Stocks To Watch: Eyes On Broadcom, Target, Costco, Rivian And Small Caps

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The U.S. jobs report for February will be the headline economic event of the week. Economists forecast that employment likely increased by 190K during the month and the unemployment forecast is anticipated to stand pat at 3.7%. Notably, the month-over-month increase in average hourly earnings is expected to slow to +0.2% from +0.6% in January. The jobs report will arrive just 12 days before the next Federal Reserve Open Market Committee on March 20.

The earnings season slows down dramatically, although the tech sector has Marvell Technology (MRVL) and Broadcom (NASDAQ:AVGO) (analysis) reporting, while consumer heavyweights Target (NYSE:TGT) (preview) and Costco (COST) (preview) will also head into the earnings confessional. The event calendar includes the Morgan Stanley Technology, Media and Telecom Conference. Participants include Nvidia (NVDA), AMD (AMD), and Netflix (NFLX). American Airlines (NASDAQ:AAL) will host its 2024 Investor Day, and Rivian Automotive (NASDAQ:RIVN) has a preview event for the upcoming R2 model. Finally, the cryptocurrency market could be active again, buzz continues to build over the Bitcoin halving event expected to occur in April. The halving event reduces the reward for mining new bitcoin by half and occurs approximately every four years.

Earnings spotlight: Monday, March 4 – Sea Limited (SE), GitLab (GTLB) and Stitch Fix (SFIX). See the full earnings calendar.

Earnings spotlight: Tuesday, March 5 – Target (TGT), NIO (NIO), Ross Stores (ROST), Nordstrom (JWN), CrowdStrike (CRWD), and Box (BOX). See the full earnings calendar.

Earnings spotlight: Wednesday, March 6 – JD.com (JD), Brown-Forman (BF.A), Campbell Soup (CPB), Foot Locker (FL), Abercrombie & Fitch (ANF), and Victoria’s Secret (VSCO). See the full earnings calendar.

Earnings spotlight: Thursday, March 7 – Kroger (KR), Bilibili (BILI), Costco (COST), Broadcom (AVGO), Gap (GPS), Marvell Technology (MRVL), and DocuSign (DOCU). See the full earnings calendar.

Earnings spotlight: Friday, March 8 – Genesco (GCO) and America’s Car-Mart (CRMT). See the full earnings calendar.

Volatility watch: Options trading volume is still elevated on SoundHound AI (SOUN) and Barclays (BCS). The list of highly-shorted stocks heading into the new week includes Beyond Meat (BYND) and Cinemark Holdings (CNK). The most overbought stocks per their 14-day relative strength index include Viking Therapeutics (VKTX), Vivani Medical, Inc. (VANI), and Caret Holdings Inc (ROOT). The most oversold stocks per their 14-day Relative Strength Index include AN2 Therapeutics (ANTX), Semilux International (SELX), and SSR Mining (SSRM).

IPO watch: No new IPO offerings are expected to launch in the week ahead. The post-IPO quiet periods expire on American Healthcare REIT (NYSE:AHR), Kyverna Therapeutics (KYTX), Telomir Pharmaceuticals (NASDAQ:TELO), Metagenomi (NASDAQ:MGX), and BBB Foods (TBBB) to free up analysts to post up ratings. A block of Solowin (SWIN) shares will see the IPO lockup period expire. Amer Sports (NYSE:AS) will release its first earnings report as a publicly-traded company. The sporting good stock traded about 25% above its IPO pricing level at the time of publication.

Dividend watch: Companies forecast to increase their quarterly dividend payouts include American Express (AXP) to $0.70 from $0.60, Ross Stores (ROST) to $0.36 from $0.335, and Applied Materials (AMAT) to $0.34 from $0.32. Read through some of the dividend stock picks from Seeking Alpha analysts.

Investor events: A busy week of investor events includes American Airlines Group (AAL) Chief Executive Officer Robert Isom and senior leadership presenting at the company’s Investor Day and Mattel (NASDAQ:MAT) providing a strategic business update. General Electric Company (GE) could also turn some heads when it holds a GE Aerospace Investor Day event with the aerospace leadership team. One of the more notable conferences of the year takes place next week with the Morgan Stanley Technology, Media and Telecom Conference scheduled for San Francisco. The event is expected to include updates on some of the latest trends in generative artificial intelligence and other themes shaping technology, media and telecom. Nvidia (NVDA), Netflix (NFLX), AMD (AMD), Disney (DIS), Palo Alto Networks (PANW), Coinbase Global (COIN), C3.ai (AI), Intel (INTC), Okta (OKTA), IMAX (IMAX), and Iron Mountain (IRM) are just some of the companies scheduled to participate. Meanwhile, BetMGM (OTCPK:GMVHF) (MGM) CEO Adam Greenblatt will be one of the notable speakers at the NEXT Summit New York, which is described as North America’s premier iGaming and sports betting conference. Also keep an eye on Rivian Automotive (RIVN). The electric vehicle maker has an event scheduled in Laguna Beach, California to reveal its next-generation vehicle called the R2. The electric SUV model is expected to be smaller and cheaper than the R1S and R1T. The company has hinted that this model could be listed in the $40,000 to $60,000 range. Mass production of the R2 is not expected until 2026.

Target earnings preview: Target Corporation (TGT) will report earnings for the holiday quarter on March 5 and hold a financial community meeting to go over results and strategies. The Minneapolis-based retailer is forecast to report revenue of $31.9B on a same-store decline of 4.6% and EPS of $2.41. Both customer traffic and customer average ticket are expected to be lower during the quarter. Gross margin is expected to land at 25.0% of total sales, and adjusted EBITDA of $2.23B is anticipated. Oppenheimer expects Target will issue cautious guidance and thinks management could update intermediate-term operating margin targets. The firm still continues to see a path for Target to reach a nearly 6% operating margin and +$10 per share earnings by FY25. The advice to investors is to snap up shares on any earnings day weakness. Bank of America also has a positive stance on Target. The firm thinks that while near-term sales remain challenged, investors may look through recent pressure to a potential inflection in Q2, when Target is noted to have easier comparisons as it laps depressed traffic results. “We believe customer perception has improved from these trough levels, as evidenced by the notable rebound in Morning Consult’s net purchase consideration and net favorability data,” observed analyst Robert Ohmes. For the earnings call, some of the key topics will be the initial FY24 guidance, the latest on cost savings efforts, indications of a subscription offering, and capital allocation priorities. Options trading implies a 7% swing in share price after the earnings report drops. The three stocks with shares prices that correlate the tightest to Target are Nordstrom (JWN), Abercrombie & Fitch (ANF), and Dollar Tree (DLTR).

Playing small ball: Following the intense investor focus on the Magnificent Seven group of Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), Tesla (TSLA); Investing Group Leader Lawrence Fuller thinks more underappreciated stocks in the market will outperform the tech favorites. He noted that the economy is just now starting to see a return to growth for the manufacturing sector, as the much larger services sector cools off from an unsustainable rate of growth. Fuller said the soft landing for the U.S. economy is still on track, which sets up small-cap stocks as the year progresses. Taking the line of thought a step further, Bank of America recently screened for small cap stocks from the Russell 2000 (IWM) that are potential M&A candidates based on having single share class; below average debt; a float of less than 90%; three years of positive operating cash flow; three years of positive sales growth; and with a 15% discount to their industry group median valuation on key metric such as enterprise value over OCF, EV over free cash flow, and EV over earnings before interest and taxes. The list of potential small cap gems included Adtalem Global Education (ATGE), Chegg (CHGG), CVR Energy (CVI), Forward Air (FWRD), Inspired Entertainment, Inc. (INSE), MasterCraft Boat (MCFT), and Peabody Energy (BTU).

Box office preview: The box office sector will be looking for a jolt with Legendary Entertainment and Warner Bros.’ Dune: Part Two opening over the weekend. The Denis Villeneuve-directed, big-budget sequel is forecast to bring in $70M to $80M for the weekend in the U.S. and $170M worldwide, although estimates have been trending higher. The film was originally scheduled to hit the big screen last fall, but was delayed because the writers’ strike prevented Timothée Chalamet, Zendaya and their co-stars from being able to promote the movie. Of the $12M in preview grosses for the film, IMAX (IMAX) made up $4.5M of that. The blockbuster-friendly IMAX format will show the new Dune on 802 screens in 81 countries. Dune: Part Two is also opening in 71 overseas markets this weekend, with China to follow on March 8. All in all, it’s shaping up to be among the strongest industry weekends since Christmas week brought a dozen new releases for AMC Entertainment (AMC), Cineworld, Cinemark (CNK), IMAX (IMAX), Marcus (MCS), Reading International (RDI), Cineplex (CGX:CA), and National CineMedia (NCMI).