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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Apr 5, 2020 at 6:00AM

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

Stocks fell last week as the coronavirus' spread continued to dramatically depress economic activity around the world. Both the Dow Jones Industrial Average and the S&P 500 shed roughly 2.5%, and indexes remain lower by over 20% so far this year.

The dynamic coronavirus situation will hold investors' attention in the week ahead, but there are several highly anticipated earnings announcements also on the way. Below, we'll look at the metrics that might move the stocks of Levi Strauss (LEVI -3.56%), Costco Wholesale (COST 0.60%), and MSC Industrial Supply (MSM -0.45%) over the next few trading days.

A man looks out the window while drinking coffee.

Image source: Getty Images.

Levi Strauss' holiday sales

Denim specialist Levi Strauss will announce its latest earnings results on Tuesday afternoon. Investors had several reasons for optimism in the weeks following its last report, which showed flat sales and a modest profit decline. Those weak numbers were affected by the timing shift around Black Friday, though, and Levi's broader 2019 metrics were at the high end of management's targets. "Organic revenue growth met our expectations in spite of being masked by Black Friday falling in fiscal 2020," CEO Chip Bergh said in a late-January press release.

That shift should help sales for the current reporting period, with revenue projected to rise 6% according to management's latest outlook. Investors will be more focused on how the manufacturer is preparing to handle slumping sales tied to temporary store closures, which began on March 12. Look for Bergh and his team to discuss their plans to keep the digital sales channel going while making aggressive moves to shore up cash during this major disruption to its operations.

Costco's sales volumes

Costco's shares have dramatically outperformed the wider market in recent weeks as the business benefits from huge demand shifts toward prepare-at-home food. The chain will have an opportunity to confirm those growth predictions when it announces its March sales results on Wednesday.

The numbers might be staggering. Costco said on March 5 that sales soared during the final days of February as COVID-19 worries struck consumers in the U.S. Customer traffic and average spending both jumped, in fact. Each of those metrics was likely pushed even higher as restaurant chains closed or dramatically scaled back services around March 12.

That situation all but ensures that the consumer staples giant will announce unusually strong sales gains this week. But investors will have to wait until its full quarterly report in late May to get updates on Costco's supply chain and management's outlook for the rest of fiscal 2020.

MSC Industrial Supply's outlook

MSC Industrial steps up to the earnings plate on Wednesday morning, and investors are bracing for some bad news from the manufacturing repair and maintenance expert. Demand trends were weak in the previous quarter, even though the company outperformed management's targets on both the top and bottom lines.

The recent coronavirus disruption to major manufacturing industries, particularly aerospace, might contribute to a sharp drop in sales projections from CEO Erik Gershwind and his team. At the same time, the weaker environment likely scrapped plans for price increases that were originally set to start in late February.

The growth slowdown won't jeopardize management's longer-term plan to move up the value chain by providing more technical products and services. Yet MSC Industrial still might warn of much more volatility ahead as the manufacturing sector tries to stabilize over the next few months.

Demitrios Kalogeropoulos owns shares of Costco Wholesale. The Motley Fool owns shares of MSC Industrial Direct. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
$556.32 (0.60%) $3.30
MSC Industrial Direct Co., Inc. Stock Quote
MSC Industrial Direct Co., Inc.
$85.90 (-0.45%) $0.39
Levi Strauss & Co. Stock Quote
Levi Strauss & Co.
$19.51 (-3.56%) $0.72
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$33,980.32 (-0.50%) $-171.69
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$4,274.04 (-0.72%) $-31.16

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

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