There's never a wrong time to make some market predictions, especially this summer, when the stakes are so high. There will be winners. There will be losers. Choose well, and you can make some money in August.
I think Walt Disney (DIS -0.04%) will bounce back after a flattish start to 2023. I also believe that Celsius Holdings (CELH 2.12%) will beat the market, just as the S&P 500 (^GSPC 1.02%) finally takes a breather this month.
1. Disney stock will move higher
Media stocks have been market laggards lately, even as most sectors have been rallying in recent months. Shares of Disney have fallen 25% since hitting a near-term peak in February, and it has moved lower for four consecutive weeks. This is lousy momentum heading into August.
Disney isn't putting out a theatrical release this month, so it won't break out of its box office slump. Industry watchers have also noted a slowdown in foot traffic early in the telltale summer travel season. The upside is that Disney reports its fiscal third-quarter results next week. It's not a lock to impress, but this is also CEO Bob Iger's first earnings call since extending his contract through the end of 2026.
Image source: Disney.
With a little more wiggle room, Iger will have more time to cut costs and rebuild the brand. He's no longer faced with a rushed turnaround that could be sloppy and flimsy, and next week the second-time Disney CEO will have the perfect stage to woo the naysayers.
Disney stock is cheap if it can't live up to expectations, trading at just 17 times next year's projected earnings. It can be a bigger bargain if Disney offers a brighter long-term future beyond merely making Disney+ profitable by the end of fiscal 2024. This is a company that knows a thing or two about telling a story about turning a zero into a hero. It's time to make that happen for the stock itself.
2. Celsius Holdings stock will beat the market
Unlike the House of Mouse, Celsius Holdings isn't out of favor. The company makes a fast-growing line of functional fruit-flavored sparkling beverages that help burn calories and fat by increasing one's metabolism, and the stock has been as bubbly as its flagship product. It's a 35-bagger over the past five years, and it popped 20% the day after the company posted blowout financial results three months ago. Will history repeat again this month?
The stock has risen another 13% since its initial post-earnings surge, but that's not outrageous since the S&P 500 has moved 11% higher in that time. It's not as if the stock's been collecting helium, and if anything it's the folks betting against Celsius who may want to see if their fizz is going flat. Short interest hit an all-time high on the shares in early July. Those bearish wagers are still high, approaching 14% of the shares outstanding. But with retail reports largely coming in strong, it's shaping up to be another strong quarterly performance out of Celsius.
3. The S&P 500 will head lower
Arguing that Disney will move higher and that a high-beta stock like Celsius will beat the makes sense in a bull market, but let's make things interesting. My third stock market prediction is that the market itself will decline in August. The S&P 500 has risen 20% through the first seven months of the year. Earnings season is going well, but some of the upticks don't appear earned.
There's still a disconnect out there. Rates keep rising, inflation remains stubborn. and valuations are historically high. I remain a long-term bull, but it wouldn't surprise me if the megacaps that make up the S&P 500 took a step back in August.
