Next week will be the biggest week of earnings season, with 155 S&P 500 companies and seven Dow components set to report. Ahead of the onslaught, we round up what the "Halftime Report" investment committee is saying about the names to watch.
Beyond Meat, which hit a new all-time high on Friday and has surged over 850% since its May IPO, is up first on Monday after the closing bell. As the company continues to announce deals with companies like Dunkin and Blue Apron, can the rise continue?
No, says Josh Brown of Ritholtz Wealth Management. On Friday's "Halftime Report," he argued, "Part of being a successful investor is holding two things in your head at once. You could believe that the future is some sort of engineered meat that's not harmful to animals but also say I'm not going to pay what this stock is currently selling for."
Jon Najarian of Najarian Family Office on Wednesday's show advised investors to, "wait until after those earnings come out" before making a move. "This one could suffer a bit if it doesn't outperform." According to FactSet, analysts are estimating a loss of 9 cents per share and revenues of $52.5 million for Beyond Meat.
Apple, the last of the FAANG names to report this season, will release results on Tuesday after the bell. Analysts speculating that a 5G iPhone cycle could reinvigorate declining sales have reason to hope for the long-term: Apple just announced it will buy the majority of Intel's 5G smartphone modem chip division for $1 billion. But what about the short-term?
Earnings won't be anything special, predicts Brown, but you should still stick with the stock. "You're not going to have blow out numbers in any hardware. This is going to be about services, and that's where the volatility, either upside or downside, will come." Apple has been shifting more into services recently, most notably with its new entertainment streaming service, Apple TV+, to roll out in the fall.
"Regardless of what happens," Brown said on Friday, "you're still talking about one of the best companies in the world, selling at 17 times forward estimates. I think it's reasonable to be long here."
Factset estimates $2.09 in EPS and revenues of $53.3 billion for Apple. Qualcomm, the chipmaker that could suffer the most as Apple develops 5G chips in-house, is also reporting next week on Wednesday.
The theme of 5G carries over to the telecom space and is the main reason you should be bullish on Verizon, according to Joe Terranova of Virtus Investment Partners. He predicts Verizon, which reports on Tuesday, will not surge on earnings and return to the November 2018 high of $61.58, but he plans to "stay with it."
"This is a long-term investment. This is about the build out of 5G," Terranova said of Verizon. "They're ahead of AT&T in terms of locations. In April, they rolled out in multiple cities." Competition could also be coming from another front: the massive T-Mobile and Sprint merger that was just approved by the Department of Justice Friday.
Chevron, which reports on Friday, walked away from its own big deal, the acquisition of Anadarko Petroleum, in May — but Sarat Sethi, managing partner at Douglas C. Lane & Associates, thinks it will be rewarded for its discipline. "They were better off not buying Anadarko. They stuck to their knitting and that's going to show in the stock. We like the stock, as management is well controlled."
On the earnings report, Sethi is "going to look at the capital allocation story, the cash flow story. The dividend is almost 5%; that's pretty safe. The question is what is the return on investment and what do they see for the next couple years." Analysts are expecting EPS of $1.78 and revenues of $40.6 billion, according to Factset.
Occidental Petroleum, the company that outbid Chevron for Anadarko, is also reporting earnings next Thursday.
Stephanie Link, Head of Global Equities Research at Nuveen, will be paying attention to that story when the company reports on Tuesday. "I just want to see that the restructuring is still making progress. Gross margins are headed higher, inventory lower, top line probably low/mid single digit growth — not expecting much on the top line." Analysts are expecting $1.2 billion in revenue and a loss of 5 cents per share.
Disclosure: Josh Brown owns shares of Apple. Stephanie Link owns shares of Under Armour. Sarat Sethi owns shares of Anadarko Petroleum Corporation and Chevron. Joe Terranova owns shares of Verizon.