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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Nov 3, 2019 at 3:00PM

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Activision Blizzard is one of several stocks set to make big moves over the next few days.

Stocks rose last week, with both the S&P 500 ( ^GSPC -0.84% ) and the Dow Jones Industrial Average ( ^DJI -0.17% ) inching further into record territory. Investors were generally happy with the deluge of third-quarter earnings announcements and economic data that implied robust consumer confidence. That optimism sent indexes higher by more than 1% last week.

Earnings season continues in the week ahead. Below, we'll take a look at the metrics that promise to send shares of Monster Beverage ( MNST 0.89% ), Shake Shack ( SHAK -4.76% ) and Activision Blizzard ( ATVI 0.12% ) moving over the next few trading days.

Shake Shack's traffic

Investors are optimistic heading into Shack Shack's third-quarter report on Monday. The "better burger" upstart has recently returned to sales growth at existing locations by achieving something that's rare in the industry these days: increasing customer traffic.

A 1% uptick on that measure combined with higher pricing to send comps up by 4% last quarter. Industry leader McDonald's recently posted a 6% comps increase but hasn't seen higher U.S. traffic in over a year.

A man bites into a burger.

Image source: Getty Images.

Shake Shack could get an assist from its aggressive push into home delivery, and investors will also be following the chain's profitability, which has fallen this year. Minor operating margin declines are expected as the fast-food specialist matures out of its New York region roots, but CEO Randy Garutti and his team will need all the financial ammunition they can get to support those optimistic plans to grow the store base both in the U.S. and internationally.

Monster Beverage's sales growth

Debate among investors about Monster Beverage's growth outlook have created volatility for the stock this year, which is roughly keeping track with the market heading into the earnings report on Thursday. The energy drink pioneer has been riding a wave of high demand for caffeinated drinks, but its market-thumping momentum is showing signs of letting up. Last quarter, revenue gains fell into the single digits and trailed the 11% increase that investors were hoping to see.

This week, CEO Rodney Sacks and his team will likely cite new drink releases like the Reign Total Body Fuel brand for helping support overall sales growth as competitors continue flooding into the niche. International growth is a huge part of the investment thesis, too, with outside markets likely to pick up at least some of the slack from a more competitive U.S. segment.

Activision Blizzard's audience size

Activision Blizzard has rallied rally over the last few months. Investors are expecting good news from the company when the video-game giant reports earnings after the market closes on Wednesday. The company has struggled through the last few reports, which showed a shrinking base of gamers across both its core collection of high-profile games and its casual-gaming unit under the King Digital brand.

But Activision changed gears several months ago by directing more resources toward its tentpole franchises. This week's report constitutes investors' best window into the early results from that strategic move.

Besides watching key engagement metrics such as audience size and in-game spending, Wall Street will be focused on the launch statistics from Call of Duty: Modern Warfare, which have been encouraging so far. Activision has found a way to keep that franchise on top of global sales charts for many of the past nine fiscal years, but that position is getting harder to maintain as rivals like Take-Two Interactive and Electronic Arts raise the bar on gaming content.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$34,580.08 (-0.17%) $-59.71
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$4,538.43 (-0.84%) $-38.67
Monster Beverage Corporation Stock Quote
Monster Beverage Corporation
$83.70 (0.89%) $0.74
Activision Blizzard, Inc. Stock Quote
Activision Blizzard, Inc.
$57.36 (0.12%) $0.07
Shake Shack Inc. Stock Quote
Shake Shack Inc.
$69.82 (-4.76%) $-3.49

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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