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2 Hot Stocks to Watch in October

By Daniel Sparks – Updated Sep 29, 2021 at 9:09AM

Key Points

  • Facebook's revenue and earnings have been soaring.
  • Can Tesla grow deliveries in the face of global supply chain and logistics challenges?
  • Investors will likely get an update on Tesla this weekend.

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Earnings season is almost here. Can these fast-growing companies impress Wall Street?

Fall is here -- and that means third-quarter earnings reports are just around the corner. Q3 is wrapping up at a time in which Wall Street seems quite skittish, making company updates in October particularly important. The Nasdaq Composite is down 5% in September as investors worry that rising bond yields will shift money out of stocks.

Investors, therefore, will look to earnings reports next month to potentially comfort Wall Street with strong fundamentals. Two fast-growing companies that could impress investors with strong business performance when they report their quarterly results next month are Facebook (META 2.53%) and Tesla (TSLA 0.08%).

Charts on a chalkboard and a smartphone.

Image source: Getty Images.

Facebook

Typically reporting its third-quarter results toward the end of October, Facebook is likely to report 30%-plus revenue growth for the period. Analysts, on average, expect the social network giant's top line to grow 38% year over year to $29.5 billion. That's on top of 22% revenue growth in the year-ago quarter.

The company's profits should jump, too. On average, analysts expect earnings per share for the quarter to be $3.17, up from $2.71 in the year-ago period.

Facebook has been benefiting from high demand from advertisers as they capitalize on the tech company's engaged user base. The company said in its second-quarter update that it boasted 3.51 billion unique monthly active users across the company's social media platforms, Facebook, WhatsApp, Instagram, and Messenger. This was up 12% from its user count in the year-ago quarter.

Momentum in user engagement across Facebook's apps, combined with strong demand from marketers for the social network's ad products, should help power a strong third quarter.

Tesla

Electric-car maker Tesla has broken out from its peers this year with exceptionally strong growth in production and deliveries -- even amid an automotive chip shortage and other supply chain and logistics challenges. Tesla's second-quarter deliveries rose to a record 201,304 -- up from 184,877 in the prior quarter and just 90,891 in the year-ago quarter.

With Tesla investing heavily in production in 2021, the company may deliver record vehicles yet again in Q3, despite significant challenges. The automaker guided for total deliveries in 2021 to exceed 750,000 vehicles, up from about 500,000 deliveries in 2020, even as management acknowledged automotive global supply and logistics challenges.

Several analysts recently predicted deliveries for the quarter to be in the 225,000 to 233,000 range. Though these analyst estimates could prove to be too aggressive. Forecasts are difficult in this challenging operating environment. "With global vehicle demand at record levels, component supply will have a strong influence on the rate of our delivery growth for the rest of this year," Tesla said in its second-quarter update.

Whatever the case, Tesla does look poised to post extremely strong year-over-year growth in deliveries. Third-quarter 2020 deliveries were under 140,000. Strong growth in deliveries should translate to impressive financials as well. 

Tesla typically reports its third-quarter vehicle deliveries in the first few days of October. Its earnings report will likely follow in the second half of October.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook and Tesla. The Motley Fool has a disclosure policy.

Stocks Mentioned

Meta Platforms Stock Quote
Meta Platforms
META
$123.49 (2.53%) $3.05
Tesla Stock Quote
Tesla
TSLA
$194.86 (0.08%) $0.16

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

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