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3 Things to Watch in the Stock Market This Week

By Demitri Kalogeropoulos - Sep 26, 2021 at 7:00AM

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CarMax is one of several popular stocks set to announce earnings results over the next few trading days.

Stocks rose last week following two consecutive down weeks. Both the Dow Jones Industrial Average ( ^DJI -0.17% ) and the S&P 500 ( ^GSPC -0.84% ) gained over 0.5% and are higher by 14% and 19% on the year, respectively.

Several fresh earnings reports are on tap over the next few trading days. Let's take a closer look at a few highly anticipated announcements from this list, by CarMax ( KMX -0.98% ), McCormick ( MKC 1.76% ), and Thor Industries ( THOR ).

A masked couple shopping for a car during the pandemic.

Image source: Getty Images.

1. CarMax's profit per vehicle

CarMax steps up to the earnings plate on Thursday in a highly anticipated announcement. The business has been benefiting from a great selling environment for used automobiles, with prices jumping and demand soaring. These positive trends likely continued into the summer months thanks to tight inventory in the new car industry.

Watch for CarMax to tout any market share gains it has made in its highly fractured industry. CEO Bill Nash and his team are aiming to push the company's share to over 5% of national retailing volumes and they are approaching that milestone in 2021.

Meanwhile, short-term earnings should be impressive this week as CarMax looks to earn at least $2,200 of profit on each vehicle it sells. Key to extending that gross profit bounce will be its ability to maintain an adequate inventory level heading into late 2021.

2. McCormick's sales growth

Despite strong operating metrics in its last report, McCormick's stock is limping into its Thursday earnings update. Shares haven't participated in the 2021 rally at all and are lower so far in 2021.

That trend could begin to change if the spicing and flavorings giant demonstrates its pricing power this week. It rolled out higher prices across the portfolio this summer, and if demand held up then sales growth could accelerate. McCormick is currently targeting between 8% and 10% organic sales gains this year, or a bit faster than industry peer PepsiCo is forecasting.

McCormick's annual cash flow recently crossed $1 billion, too, which bodes well for shareholders' future returns. But there are more reasons to like this stock heading into Thursday's earnings report.

3. Thor Industries' backlog

Recreational-vehicle specialist Thor Industries will close out its fiscal fourth quarter on Tuesday, and expectations are low heading into that report. The RV industry has been booming this year as consumers prioritize domestic, outdoor travel options. Sales more than doubled in Thor's last report compared with the pandemic slump a year ago.

But Wall Street is worried about supply chain shortages that might raise costs or limit Thor's growth potential. Management hinted at these challenges back in early June.

The good news is that Thor is looking at a dealership backlog that might extend well into 2022. Its main problem today is ramping up manufacturing enough to protect market share against rivals like Winnebago, which enjoys a bigger, more diverse sales footprint. We'll find out this week whether Thor lost more ground to the industry leader.

But investors will be just as interested to hear about how well consumer discretionary demand is holding up in the RV industry as Thor looks out to its fiscal 2022 year.

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

McCormick & Company, Incorporated Stock Quote
McCormick & Company, Incorporated
MKC
$88.54 (1.76%) $1.53
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$34,580.08 (-0.17%) $-59.71
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,538.43 (-0.84%) $-38.67
CarMax Inc. Stock Quote
CarMax Inc.
KMX
$142.68 (-0.98%) $-1.41
Pepsico, Inc. Stock Quote
Pepsico, Inc.
PEP
$164.71 (2.55%) $4.09
Winnebago Industries, Inc. Stock Quote
Winnebago Industries, Inc.
WGO
$72.98 (0.19%) $0.14
Synthorx, Inc. Stock Quote
Synthorx, Inc.
THOR

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

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