According to futures markets, stocks are continuing to trend lower this morning, continuing the sluggish end to trading yesterday that saw both the Dow Jones Industrial Average
So what crystal ball shall we gaze at to determine the market's direction today? If your answer was "I dunno," you're right! With so many moving parts at play -- economic data, Middle East tensions, noise from Europe, earnings season, Fed-watching, ramped-up election rhetoric, and a brand-new Shark Week -- it's hard to know which way is up. With so much uncertainty and noise to deal with, many investors let emotion drive their decision making. However, when digesting day-to-day news events, keeping a disciplined long-term focus is important, as it allows investors to capitalize on great businesses selling for great prices. Let's take a look at three businesses that, while not necessarily "great" by every measure, might be worth investigating further as they report earnings after the close today.
Of my "3 Dow Stocks to Watch This Week," Cisco is the one I'm most anxious about. Sure, Home Depot and Wal-Mart tell us more about the health of the consumer, but Cisco can tell us a lot about the health of the large enterprise. On Monday I noted that "shares have failed to fully recover after CEO John Chambers offered measured guidance for the current quarter and generally negative commentary about the enterprise and public-sector IT spending environment." Expectations aren't overwhelming for the company, but they've risen of late after recent analyst upgrades.
While this chip equipment maker won't dominate headlines like Cisco, its results will be interesting to watch -- particularly the company's guidance for the back half of the year just before a seasonally strong period for the semiconductor business. That being said, the uncertain economic environment will weigh on results this quarter, with sales expected to decline 16.8% and earnings per share down 37% relative to last year. While this quarter looks dismal, the long-term drivers of demand for semiconductor equipment -- namely, rising chip demand from mobile devices and continued improvements in chip performance -- are still intact. However, Applied's position in the supply chain and its relatively concentrated customer base are key factors to understand before making an investment.
The worst performer of the three stocks mentioned, enterprise storage provider NetApp has seen its shares slide about 13% so far this year. The story here is similar to Cisco: Shares fell under pressure following weak guidance in last quarter's earnings release. In particular, the company pointed toward "normal slower seasonality" and "increasing uncertainty in the broader macro environment." Guess which one spooked investors. Regardless, storage has been a high-growth segment in the IT arena, and it's been rumored that the company could be a buyout target from a larger peer such as IBM.
As you can tell, each of these companies is dealing with some sort of short-term headwind. However, it's important to keep long-term trends in mind when making decisions -- not just quarter-to-quarter results. Speaking of a long-term demand driver, the amount of data being collected by businesses is soaring at astronomical rates. One company, outlined in our exclusive free report "The Only Stock You Need To Profit From the NEW Technology Revolution," has found a way to capitalize on the trend in a big way. With its robust technology, it has even helped one of the world's most popular brands process real-time data on more than 16 million retail outlets worldwide. This stock has soared more than 50% this year alone and has room to run for a long time to come, so make sure you find out what it is by clicking here.
Brenton Flynn owns no shares of the companies mentioned. The Motley Fool owns shares of International Business Machines and Cisco Systems. Motley Fool newsletter services have recommended buying shares of The Home Depot. Motley Fool newsletter services have recommended creating a synthetic long position in International Business Machines. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.