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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Jul 4, 2021 at 7:00AM

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Costco is one of several stocks to watch over the next few trading days.

Stocks had a good week last week, with both the S&P 500 (^GSPC -0.16%) and the Dow Jones Industrial Average (^DJI 0.00%) gaining over 1%. Indexes are sitting near all-time highs as we enter the second half of 2021.

A few big stocks could see price swings tied to upcoming earnings announcements over the next few trading days. So let's look at the news that could affect Levi Strauss (LEVI -1.45%), WD-40 (WDFC -0.11%), and Costco (COST -0.48%) this week.

Person wearing jeans dancing in a parking lot.

Image source: Getty Images.

Levi Strauss' growth rebound

Investors are expecting plenty of good news in Levi's Wednesday report. Sales are expected to make a dramatic return to positive territory, with revenue surging 150% compared to the pandemic-disrupted period a year earlier.

The big questions heading into this week's announcement include whether Levi's avoided supply chain challenges to get its jeans and casual apparel products to the right markets. Investors are hoping the e-commerce segment continued to surge, and that the chain made further progress setting new gross profit margin records.

Overall sales are expected to rise about 33% this year after dropping 23% in fiscal 2020. We'll get a much firmer reading on that short-term outlook when CEO Chip Bergh updates the company's forecast on Wednesday.

Costco's June results

Costco is set to announce its monthly sales results for June on Thursday, and investors will be eagerly following that report for signs of a growth slowdown.

Its last monthly update contained no such issues, with sales spiking 24% following a similarly strong year-ago period. The world's second-biggest retailer is enjoying sustained demand spikes even as consumer spending patterns are shifting away from essentials and toward more discretionary purchases like electronics and home furnishings.

This week's report may show gains as Costco goes up against some of the biggest sales spikes of the pandemic. Investors are currently expecting revenue to rise by 11% in the quarter that ends in August. The retailer's June results, which capture the first month of that period, could set the tone for the stock heading into the summer selling season.

WD-40's supply challenges

Investors have soured on WD-40's stock in recent weeks, but that narrative could start changing with this week's report. However, the maintenance products specialist has a high bar to meet.

WD-40's last report didn't inspire much confidence on Wall Street. Sales growth was strong but slowed compared to the prior quarter. Critically, the company failed to meet surging demand in the U.S. market because of supply chain disruptions.

Investors are hoping that this week's report shows progress in fixing those bottlenecks, along with strong growth in places like China. Yet WD-40's actual results could veer far from expectations thanks to volatile demand swings and continued supply chain issues.

Most investors who follow the stock are looking for sales to rise by just over 10% in 2021. In April, CEO Garry Ridge and his team issued a wide range of potential results that had revenue landing somewhere between $445 million and $475 million, thanks to a strong second half. That range should be tightened -- and might be shifted altogether -- this week now that WD-40 is approaching the end of the fiscal year.

Demitri Kalogeropoulos owns shares of Costco Wholesale. The Motley Fool owns shares of and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
COST
$540.67 (-0.48%) $-2.61
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$32,726.82 (0.00%) $0.00
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,145.19 (-0.16%) $-6.75
WD-40 Company Stock Quote
WD-40 Company
WDFC
$178.01 (-0.11%) $0.19
Levi Strauss & Co. Stock Quote
Levi Strauss & Co.
LEVI
$19.08 (-1.45%) $0.28

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

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