5 Stocks That Will Drive The Market This Week

After their best week since July, U.S. stocks opened little changed on Monday, with the benchmark S&P 500 and the narrower Dow Jones Industrial Average (DJINDICES: ^DJI  )  both up 0.22% at 10:15 a.m. EDT. This week is light on economic data, so expect corporate earnings to be investors' primary focus again -- in particular, technology company earnings. In the wake of a marked increase in volatility of the Nasdaq Composite  (NASDAQINDEX: ^IXIC  ) (including a correction in biotechnology stocks), this week will give the market a lot of new data against which to measure technology share valuations. Netflix is scheduled to report its first-quarter results after today's market close, followed by Apple (NASDAQ: AAPL  ) and Facebook on Wednesday. To round things out, Amazon.com and Microsoft (NASDAQ: MSFT  ) will chime in after Thursday's market close.

If you're not sure why financial journalists and investors will be paying attention to these companies, consider that this group of five high-flying technology names alone weighs in at a combined market value of $1.1 trillion, or roughly 5% of the total U.S. equity market capitalization (yes, the aggregate value of every single publicly traded company U.S. company).

Those numbers alone don't convey all of the companies' influence, of course; indeed, the smallest one by market value -- Netflix, at roughly $21 billion -- is also expected to show the highest year-on-year growth in earnings per share (note the gaping divide in the following table between the growth rates of "new tech" and "old tech"):

 

Expected EPS growth rate, based on the consensus estimate

Netflix

+161%

Facebook

+100%

Apple

+1%

Microsoft

(13%)

Amazon.com

n/a

[The base EPS figure is negative.]

Source: S&P Capital IQ.

[Strictly speaking, Netflix is not part of the technology sector, but its dynamics are very similar, both in terms of business fundamentals and in how the stock is perceived.]

I'll be particularly interested in "old tech" stalwarts Apple and Microsoft this week. The former is not expected to announce any new products alongside its results; however, at the end of February, CEO Tim Cook promised that the company would update investors on its capital return program "within the next 60 days"; this is the perfect opportunity, with new Chief Financial Officer Luca Maestri making his first appearance. A year ago, Apple raised its share repurchases and dividends to $100 billion by the end of 2015, and that program is now more than half complete (by value). Without a new product announcement, another increase in the capital return program would placate investors.

At Microsoft, meanwhile, new CEO Satya Nadella has been doing a standout job since he took over the reins from Steve Ballmer in February. The market responded by sending the shares to a 14-year high in March. Nevertheless, much work remains to be done to turn this juggernaut around -- this week's results will provide more elements to assess Nadella's performance.

Finding the next Apple: 3 stocks poised to be multibaggers
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have found multi-bagger stocks time and again. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2921955, ~/Articles/ArticleHandler.aspx, 9/30/2014 12:00:26 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement