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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Apr 16, 2021 at 7:50PM

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Netflix is one of several hot stocks set to announce earnings results in the days ahead.

Stocks pushed further into record territory last week, as both the Dow Jones Industrial Average (^DJI 1.27%) and the S&P 500 (^GSPC 1.73%) gained over 1%. Both indexes stand roughly 11% higher in 2021 after surging last year.

Earnings season continues with many of the market's favorite stocks reporting results over the next few trading days. That list includes Netflix (NFLX 2.72%), Procter & Gamble (PG 0.97%), and Tractor Supply (TSCO 1.04%), whose announcements we'll preview.

A family watches TV together.

Image source: Getty Images.

Netflix pads its lead

Netflix has a hard act to follow after its 2020 fiscal year brought in a record-setting 37 million paying members and pushed the streaming video giant above 200 million users. Investor expectations for a growth hangover help explain why the stock has trailed the market this year heading into its Tuesday earnings announcement.

Yes, that report should show subscriber gains slow to 6 million from 16 million a year ago when the pandemic started placing a huge premium on at-home entertainment. But Netflix is still aiming to pad its lead in 2021, even if its sales and earnings growth seems tepid compared to last year.

Co-CEO Reed Hastings and his team will discuss the early results from their big push into feature-film releases as a natural extension of the dominant position they've built in TV series. That's the surest path toward boosting user engagement, and monthly prices, over time.

Procter & Gamble goes for growth

Investors should get a few pieces of good news in Procter & Gamble's fiscal third-quarter report, set for Tuesday morning. The owner of market-leading brands like Tide, Bounty, and Pampers should announce faster sales growth than peer Kimberly-Clark, as it has through most of the pandemic. Operating margin is likely to have led the industry again, too, as consumers traded up to premium products like Tide Pods.

Keep an eye on management's cash return plans, too. Executives already announced a surprise increase to their stock buyback targets this year, but Tuesday's report might increase it again after the company just raised the dividend. P&G has lifted that payout each year for many decades. But the 10% raise was much more aggressive than last year's 4% boost, suggesting positive growth momentum this quarter.

Tractor Supply delivers

Tractor Supply's stock has been a big winner since the pandemic struck, up about 100% since mid-April 2020. Sales spiked as people prioritized home spending and as the rural lifestyle gained a bigger focus in the country. Revenue jumped 27% on surging customer demand both in stores and online.

Tractor Supply is hoping to extend that solid momentum into 2021 with its first-quarter report on Thursday. That announcement should include sharply rising revenue even compared to the boost a year ago. And CEO Hal Lawton and his team are aiming for higher profit margins even as they build up a huge e-commerce fulfillment platform this year.

The retailer usually waits until after the second quarter to update its annual outlook, though, so don't expect a big shift from its current forecast calling for roughly flat sales in 2021 as operating margin climbs toward 10% of sales.

Demitri Kalogeropoulos owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix and Tractor Supply. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
NFLX
$249.30 (2.72%) $6.60
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,761.05 (1.27%) $424.38
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,280.15 (1.73%) $72.88
The Procter & Gamble Company Stock Quote
The Procter & Gamble Company
PG
$146.67 (0.97%) $1.41
Tractor Supply Company Stock Quote
Tractor Supply Company
TSCO
$196.93 (1.04%) $2.03
Kimberly-Clark Corporation Stock Quote
Kimberly-Clark Corporation
KMB
$135.48 (0.63%) $0.85

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

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