MichaelDSebastian1810326 / CC BY-SA
Four times per year – once each quarter – publicly traded companies open their financial books to give investors a look inside their businesses.
We call it “earnings season” and these four days are always some of the most important times of the year for stocks.
That’s because you can get a big move in the stock one way or the other depending on whether it surpasses or disappoints consensus financial analyst expectations.
Last week, Q2 2020 earnings season kicked off when 173 companies reported.
We saw companies like PepsiCo, Inc. (NASDAQ: PEP), Delta Air Lines, Inc. (NYSE: DAL), Wells Fargo & Co. (NYSE: WFC), Goldman Sachs Group Inc. (NYSE: GS), Bank of America Corp. (NYSE: BAC), Netflix Inc. (NASDAQ: NFLX), Domino’s Pizza Inc. (NYSE: DPZ), Morgan Stanley (NYSE: MS), Johnson & Johnson (NYSE: JNJ) and BlackRock, Inc. (NYSE: BLK) all report.
But if you thought that was a lot, just wait until this week when 484 more companies are scheduled report…
Here are 13 of the most important earnings reports to watch and trade this week…
Airline Stocks
I am very bearish on the airlines right now.
Back in April, these companies received $25 billion in bailouts from the U.S. government so they could continue paying their hundreds of thousands of employees.
Under the terms, airlines aren’t allowed to make any layoffs or job cuts until September 30.
The hope was that the money would be enough to tide the airlines over until October, when travel was expected to pick back up again.
But that clearly hasn’t happened as the number of passengers going through TSA was down 74% from normal times a year ago.
With COVID cases surging again, it doesn’t seem like this trend will reverse itself.
Therefore, I am bearish on JetBlue Airways Corp. (NYSE: JBLU) and United Airlines Holdings Inc. (NYSE: UAL), both of which report earnings on Tuesday.
After finding loopholes in the government bailout, United told 36,000 employees (about 40% of its workforce) that they could be furloughed.
Southwest (NYSE: LUV), which has never had an involuntary furlough, told employees that cuts will happen unless passenger numbers increased by 3X before the end of the year.
Since I don’t see that happening, I’m also bearish on Southwest and Alaska Air Group Inc. (NYSE: ALK), both of which report Q2 2020 earnings on Thursday.
You could set yourself up to profit from these expectations by purchasing put options contracts on each company.
Oil Stocks
Since oil prices briefly went negative back in April, oil producing stocks have recovered most of their losses.
Halliburton Co. (NYSE: HAL) is a perfect example…
HAL has nearly doubled since April and after its Q2 earnings report this morning, the stock is already up another 5%.
Halliburton still hasn’t even recovered to its pre-COVID levels of about $25 per share (it’s currently trading for $13.75).
So, if HAL is able to continue this momentum, the stock could reasonably double again in the next year or two.
The best part is, one of Halliburton’s biggest and most successful competitors – Schlumberger (NYSE: SLB) – reports on Friday.
And I think investors could profit by either purchasing call options on SLB, or the stock outright.
Tech Stocks
Technology companies continue to be one of the bright spots during the COVID-19 lockdowns.
And with cases going up in the US, I don’t see that trend slowing down any time soon…
Just look at what has happened since I called these 3 tech stocks back in June. They're up 36%, 43%, and 45%, respectively.
The Nasdaq Composite is currently at all-time highs and it's easily outpacing the broader market.
Since I expect this tech momentum to continue, here are some of the most important technology stocks reporting earnings this week:
Monday, July 20: IBM Common Stock (NYSE: IBM)
Tuesday, July 21: Snap Inc. (NYSE: SNAP)
Wednesday, July 22: Tesla Inc. (NASDAQ: TSLA)
Wednesday, July 22: Microsoft Corp. (NASDAQ: MSFT)
Thursday, July 23: Twitter Inc. (NYSE: TWTR)
Friday, July 24: Verizon Communications Inc. (NYSE: VZ)
Friday, July 24: Honeywell International Inc. (NYSE: HON)
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