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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Mar 20, 2021 at 6:00AM

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GameStop is one of several hot stocks set to announce earnings results over the next few days.

Stocks didn't move much last week, as the Dow Jones Industrial Average (^DJI 1.05%) ended flat and the S&P 500 (^GSPC 1.05%) shed less than 1%. Both indexes are near record highs, having risen by more than 60% since the pandemic slump a year ago.

Several of the market's favorite companies will be reporting results that could send their stocks moving over the next few trading days. That list includes GameStop (GME 0.92%), Winnebago (WGO 1.15%), and General Mills (GIS 0.45%), whose announcements we'll preview.

Two people playing console video games together.

Image source: Getty Images.

GameStop's holiday sales

Tuesday marks GameStop's first quarterly earnings update since the specialty retailer's stock became a star on social media and a trading sensation on Wall Street. Shares had been stuck below $20 for the three years ending in 2020 as the business shrank and earnings deteriorated. But the stock soared to over $300 early this year thanks to an epic short squeeze.

There's no doubt that GameStop will have some positive news to report this week. November marked its best sales month in years, management said in mid-December. And elevated demand for new console releases has probably kept that momentum going for the rest of the chain's fiscal fourth quarter.

But the bigger question is whether GameStop can do more than post an occasional modest rebound after a chain of disappointing operating results. The odds are stacked against the struggling video game retailer. But this week management will still detail its hopes to transform the business into more of a technology hub.

Winnebago's backlog

The RV industry is booming right now, and that's great news for the industry leader. But much of that optimism is reflected in Winnebago's surging stock price ahead of its Wednesday earnings report, and that could create a volatile trading week ahead.

Most investors are expecting to see impressive sales gains given the fact that dealership orders spiked last quarter for both towable and motorhome products. In fact, dealers had trouble keeping inventory stocked last quarter.

Those factors point to good news on both the sales and profitability fronts, since pricing was probably strong in the fiscal second quarter. But shareholders will be eager to hear updates from CEO Michael Happe and his team on Winnebago's spring product launches, management's new outlook for 2021, and their latest order backlog figures.

General Mills' outlook

General Mills announces its results on Wednesday, and investors are bracing for another modest growth slowdown from the packaged-foods giant. Organic sales gains landed at 7% last quarter, compared to 10% in the previous quarter, as the pandemic's impact lessened. General Mills notched rising profitability, though, and raised its earnings outlook.

The company is likely to start seeing slumping year-over-year demand beginning in the fiscal fourth quarter as the prior-year period captured much of the early COVID-19 shutdown days. But there's a good chance that the business will be on a firmer footing even after the pandemic threat fades away.

General Mills has introduced its products to millions of new customers over the past year. Persuading many of them to continue using its snacks, cereals, and pet food brands will be a challenge, but one that should allow for sustainably faster growth and higher earnings following an expected slowdown in 2021.

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Stocks Mentioned

GameStop Corp. Stock Quote
GameStop Corp.
GME
$123.42 (0.92%) $1.12
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,097.26 (1.05%) $321.83
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,825.33 (1.05%) $39.95
General Mills, Inc. Stock Quote
General Mills, Inc.
GIS
$75.79 (0.45%) $0.34
Winnebago Industries, Inc. Stock Quote
Winnebago Industries, Inc.
WGO
$49.12 (1.15%) $0.56

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

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