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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Jan 2, 2021 at 7:35AM

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Costco is one of several stocks set to announce operating results over the next few trading days.

Stocks rose last week, as both the Dow Jones Industrial Average ( ^DJI 1.87% ) and the S&P 500 ( ^GSPC 1.17% ) gained over 1% in the final trading week of the year. That boost left the Dow higher by 7% in 2020, while the S&P was up 16%. Both indexes were down over 25% during early COVID-19 containment efforts in March and April.

A few widely owned stocks will announce operating results over the next few trading days, including Costco ( COST 0.81% ), Constellation Brands ( STZ 2.07% ), and Simply Good Foods ( SMPL 1.11% ). Let's take a look at the key trends that might send their shares moving this week.

An employee restocking fresh produce.

Image source: Getty Images.

Costco's holiday spike

Costco is alone among major retailers who still announce monthly sales figures, and this week brings the most anticipated of these timely reports. On Wednesday, the warehouse giant will reveal its revenue trends for December, which captures most of the peak holiday shopping spike.

Costco's last quarterly report showed solid momentum through late November. Sales jumped 17% in the fiscal first quarter, executives said in early December. A few other metrics suggest Costco will announce solid holiday sales results this week, including the fact that subscriber renewal rates are holding near a record high at 91%. The chain is also enjoying rising traffic at its stores and surging demand through the online segment.

Those wins confirm that members are getting plenty of value from their annual subscriptions despite all the COVID-19 disruptions to retailing demand. Look for Costco to add to that bright outlook this week.

Constellation Brands' beer sales

Constellation Brands, the owner of imported beer brands like Corona and Modelo, will announce its quarterly results on Thursday. Investors' attention will be focused on sales, which have been impacted by huge declines in the restaurant and bar segment but sharp spikes in the at-home consumption niche. Constellation last reported a 5% uptick in its overall beer business, which kept it ahead of larger rivals such as Anheuser-Busch InBev but behind Boston Beer.

The company's recent entry into the hard seltzer segment aims to close that growth gap with Boston Beer, the owner of the blockbuster Truly franchise. We'll get updates on how well Constellation's Corona Hard Seltzer fared in its third quarter of availability.

Meanwhile, look for CEO Bill Newlands and his team to show progress at boosting profit margins for the wine and spirits segment. Two of the biggest reasons to like this stock involve long-term bets, such as investments in recreational marijuana products and Constellation's massive investment in its brewery network. The company should update shareholders on each of these projects on Thursday.

Simply Good Foods' outlook

Simply Good Foods' stock trailed the market by a wide margin for most of 2020 but shares recently shot back into positive territory on hopes that the business is on a sustainable growth path. That optimism will be put to the test when the company announces fiscal first-quarter results on Wednesday.

The owner of the Atkins and Quest snack food brands has endured spiking volatility as COVID-19 restrictions initially spurred stock-up purchases before demand plunged in March and April. The company's fiscal Q4 report showed improving results, although its organic growth rate was still below the pre-coronavirus level.

CEO Joseph Scalzo said in late October that the pandemic appeared to be pressuring consumers' demand for weight control nutritional products. That shift had the company projecting continued modest sales gains in Q1 that track closely with last quarter's 4% increase. Given the stock's spike in recent weeks, investors are hoping to hear stronger growth results, and potentially a bullish outlook, from Simply Good Foods this week.

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

Constellation Brands, Inc. Stock Quote
Constellation Brands, Inc.
$230.87 (2.07%) $4.68
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$35,227.03 (1.87%) $646.95
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$4,591.67 (1.17%) $53.24
Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
$533.20 (0.81%) $4.27
The Simply Good Foods Company Stock Quote
The Simply Good Foods Company
$37.22 (1.11%) $0.41

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

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