The stock market has done well recently, and the favorable sentiment has sent the Nasdaq Composite (^IXIC 0.00%) to record levels. On Friday, the Nasdaq looked on pace to close a strong week on a quiet note, with the index hovering near the unchanged level as of 1 p.m. EDT.
We're almost halfway through 2021, and investors are trying to get a read on how the second half of the year will go. Despite the current lull in corporate earnings releases, market participants will get three key readings from major companies next week. Nasdaq investors should treat these reports as must-read news that could move markets as we pass the six-month mark in the current year.
Bed Bath & Beyond
Bed Bath & Beyond (BBBY -19.63%) will report its fiscal first-quarter results on Wednesday morning, June 30. The home furnishings stock has gotten a lot of attention both because of its turnaround efforts and because of its relatively new status as a meme stock followed by individual investors.
Bed Bath & Beyond has struggled over the past several years as it fought to come up with a digital strategy to fend off competition from e-commerce giants. Many saw the business as ultimately doomed, and the stock got substantial short interest among investors as a result. Yet activist investors stepped in and aimed to concentrate on the company's most lucrative business opportunities, and now, some shareholders are optimistic about Bed Bath & Beyond's ability to cash in on the reopening economy.
Investors have high hopes for the coming report, expecting Bed Bath & Beyond to return to profitability and produce impressive revenue growth of around 35%. After the gains the share price has seen in the past week, anything short of those lofty aspirations could cause an abrupt reversal for the meme stock's prospects.
Chipmaker Micron Technology (MU 2.21%) weighs in with its fiscal third-quarter report on Wednesday afternoon. The company has taken full advantage of huge rises in demand for memory chips and other products, but investors have seemed increasingly nervous about how long Micron's demand will last given the notoriously cyclical nature of the semiconductor chip industry.
To be clear, few investors have any doubts about the strength of the just-ended quarter. Most of those following the stock expect earnings to double year over year, with revenue climbing at a faster than 35% pace. Many see that growth continuing well into next year. The consensus forecast for fiscal 2022 earnings puts a forward multiple of just 8 on Micron's share price.
The key question is how quickly Micron and its competitors will ramp up production capacity in order to meet higher demand. In the past, upward cycles in the chip market ended because companies like Micron boost production too far, creating gluts of chips and sending prices plunging. That in turn crushes profits, making low price-to-earnings ratios into value traps for the unwary. All eyes will be on Micron's report to see not only how things have gone, but also what the future holds for it and its rivals.
Walgreens Boots Alliance
Lastly, Walgreen Boots Alliance (WBA -5.32%) will offer its latest look at earnings on Thursday, July 1. Investors are expecting a mixed picture from the giant drugstore chain, with revenue likely slipping a bit from year-ago levels but profits jumping by nearly 65%.
Investors will watch how Walgreens has done in administering COVID-19 vaccines, which has been a one-time boon for the industry generally. However, of greater long-term concern will be any comments on whether the possibility of e-commerce giant Amazon (AMZN 0.14%) challenging Walgreens' business more directly could cause problems.
Walgreens will have to have a strategy for how to build on momentum from COVID-related impacts. If the drugstore chain can't deliver, then the relatively stagnant performance of its stock could continue further into 2021 and potentially beyond.
Watch out for surprises
News that's close to what investors expect likely won't make a big difference for any of these three stocks or the stock market more broadly. But if any of these companies has a big surprise, it could turn out to be what moves the Nasdaq heading into the July 4 holiday weekend.