Last September, the U.S. stock market was catching its breath from a seven-month winning streak to all-time highs. This time around, the market is just trying to catch a break.
Equities are still reeling from the Fed’s hawkish tone and renewed fears of a global economic slowdown. Yet there’s reason to be hopeful. With the S&P 500 finding support at the psychological 4,000 level, investors are looking for confirmation that the economy is in better shape than feared heading into the four-day trading week.
As second-quarter earnings season proved, corporate executives are striking a more cautious tone about the back half of the year. Demand slowdowns, lingering supply chain issues, and cost inflation prompted many S&P companies to lower their full-year financial projections.
For companies yet to report results, the bar has been lowered significantly. While we could be in for more conservative outlooks in the weeks ahead, we could also be in for some refreshing surprises. These three volatile stocks have the potential to make this month more memorable than last.
When Does GameStop Report?
GameStop Corp. (NYSE: GME) is scheduled to provide its fiscal Q2 update after the market close on September 7th. Wall Street is projecting year-over-year revenue growth similar to the last two quarters (6% and 8% respectively). Although still operating well into the red, the video game retailer turned media jack-of-all trades has shown some signs of traction with its new strategy.
GameStop is now fully committed to the non-fungible tokens (NFT) market after launching its own marketplace this summer. As the gaming industry expands into new verticals, the company is aiming to get a piece of the $11 billion NFT market by establishing a community where members trade digital assets. It hopes that the platform will eventually become a popular destination for Web3 gaming. A push into other areas such as blockchain technology and e-commerce stands to further diversify the business away from traditional retail sales.
Of course, as a classic meme stock, GameStop is always prone to fireworks regardless of whether it exceeds its near-term financial targets. And since this will be the first quarterly report of the post-split era, more retail traders could get involved in the post-PR party.
Can DocuSign Win Back Investors?
DocuSign, Inc. (NASDAQ: DOCU) reports its fiscal Q2 results after the close on Thursday (9/8/22). The e-signature leader is expected to post a 9% drop in earnings for the period ended July 31st as it continues to lap difficult comparisons to its pandemic boom period. There has been much debate as to whether DocuSign can return to high growth mode. Thus far, the bears have clearly won. Not impressed by 20% to 30% top line growth, tech investors have moved on. More than $300 per share a year ago, the stock is currently trading in the $50’s.
As DocuSign continues to build out its Agreement Cloud platform and boost its eNotary offerings, customers have come on board—just not at the same pace that the market grew accustomed to. Still, it has amassed a global customer base of more than 1.2 million and may just be getting started.
Most of the world has yet to go paperless when it comes to contracts and other documentation, and has therefore yet to discover DocuSign. So as a category leader with a $50 billion opportunity ahead, the bulls think the market has become disillusioned by an inevitable near-term slowdown and has lost sight of the bigger growth picture.
All of its pandemic gains erased from the share price (and then some), DocuSign appears to have limited downside from here. A better-than-expected quarter or blockbuster announcement about its new CEO choice could spark a reversal in the weeks ahead.
Are Nike Shareholders in For a Big Jump?
NIKE, Inc. (NYSE: NKE) could go on a well overdue jog heading into its Q1 report at the end of the month. Shares of the iconic sneaker company are down more than 40% from last year’s record peak and, with a 23 relative strength indicator (RSI) reading, sit firmly in oversold territory. A 28x trailing P/E ratio that is uncharacteristically on par with the consumer discretionary sector average also points to pending reversal.
Granted, Nike is coming off ‘un-Nike’-like revenue and EPS growth of only 5% in fiscal ‘22. Covid lockdowns in China and increased transportation costs partially offset higher selling prices. Both issues are expected to subside, however, as the new fiscal year progresses, potentially lending way to strong global demand for Nike footwear and apparel. The direct-to-consumer business continues to shine and ongoing e-commerce investments stand to only build off Nike’s dominance.
The Street is projecting a 20% decline in Q1 earnings but there is significant dispersion among the nearly two dozen analysts. If management can show that business conditions are improving and strike an upbeat tone around the next few quarters, Nike bulls could sprint back
into the stock.
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