U.S. stocks rallied on Friday ahead of Donald Trump’s inauguration, as the Dow Jones Industrial Average and S&P 500 had their best week in deflating inflation since the November election.
For the week, the Dow and S&P 500 rose 3.7% and 2.9%, respectively, while the tech-heavy Nasdaq Composite rose 2.5%.
Source: Investing.com
The week ahead is expected to be another interesting one as investors continue to gauge the economy and interest rates.
US markets will be closed on Monday for the Martin Luther King holiday. President-elect Trump’s inauguration will also take place on Monday, with the incoming president expected to issue a one-day executive order.
Source: Investing.com
Meanwhile, fourth-quarter earnings season shifts into high gear, with reports expected from several high-profile companies, including Netflix (NASDAQ: NFLX ), American Express (NYSE:AXP ), Procter & Gamble (NYSE:PG ), Johnson & Johnson . (NYSE:JNJ), Verizon (NYSE:VZ), GE Aerospace (NYSE:GE), 3M Company (NYSE:MMM), United Airlines (NASDAQ:UAL) and American Airlines (NASDAQ:AAL).
Bitcoin and cryptocurrencies will also be closely watched.
Regardless of which way the market goes, below I’ve shown one stock that could be in demand and another that could be on the downside. But remember, my time limit is only for the coming week, Monday, January 20th – Friday, January 24th.
For investors looking to allocate capital this week, Netflix stands out as a strong growth opportunity. The streaming giant’s move to advertising, live events and monetization of popular content like ‘Squid Game’ are significant tailwinds that could push the stock higher in the week ahead.
The Los Gatos, California-based Internet television network is scheduled to release its fourth quarter update after the US market closes on Tuesday at 4:00 p.m. A call with executive producers Ted Sarandos and Greg Peters is set for 5:00PM ET.
Market participants expect significant volatility in NFLX stock after the release, according to the options market, with a move of nearly 9% in either direction. The stock has risen 8.8% since its last earnings report in mid-October.
Source: InvestingPro
Earnings estimates have been revised 27 times over the past 90 days, reflecting growing confidence among analysts. Only four bearish revisions were observed, highlighting Wall Street’s bullishness toward entertainment power.
Netflix saw a 99 percent increase over last year. Meanwhile, revenue is forecast to grow 15 percent year-over-year to $10.1 billion.
The company has shifted its focus from pure subscriber growth to prioritizing operating margins and revenue expansion. This pillar includes a strong advertising model, which is becoming the cornerstone of its growth strategy.
On the content front, the blockbuster release of ‘Squid Game Season 2’ and other high-profile projects will ensure a steady stream of engagement. Netflix is moving into live events, including NFL games and boxing matches, broadening its appeal to a wider audience.
Last Friday, NFLX stock ended at $858.10. At current levels, Netflix has a market cap of $366.8 billion. Shares are down 3.7% to start 2025 after posting an 83% annualized gain last year.
Source: Investing.com
It’s worth noting that Netflix has a great InvestingPro Financial Health Score of 3.1/5.0, reflecting its strong financials, strong growth prospects and innovative strategies.
Check out InvestingPro to stay on top of market trends and what they mean for your business. Register now and find out 50% discount And keep your portfolio one step ahead of everyone else!
On the other hand, Procter & Gamble has operational challenges and rapid growth, making it less attractive in the current market environment. The global consumer products company is scheduled to report its fiscal second quarter earnings before the stock market opens at 6:55AM ET on Wednesday.
The expected move in the options market is about 3.4% or lower. Shares are down 1.6% since its last earnings report in October.
Underscoring the many challenges facing Procter & Gamble, 18 of 19 analysts surveyed by InvestingPro cut their sales estimates ahead of the release.
Source: InvestingPro
P&G was seen earning $1.86 per share, up just 1.1% from the $1.84 EPS a year ago. Meanwhile, revenue is forecast to increase 2.2 percent year-over-year to $21.6 billion. These modest growth forecasts reflect mounting challenges for the company.
The consumer goods giant has recently experienced disruptions, including a ransomware attack on one of its shipping suppliers. The attack could weigh on distribution efficiency and hurt margins in the short term.
Moreover, increasing competition in key markets and inflation in raw materials are expected to limit profitability.
So, CEO John Mueller is likely to strike a cautious tone and issue softer guidance to reflect supply chain disruptions and slowdowns.
PG stock closed last Friday’s session at $161.13, not far from its lowest level since April 2024. At current estimates, the Cincinnati-based consumer goods company has a market cap of $379.5 billion. Shares fell 3.8 percent to start the new year.
Source: Investing.com
Although P&G remains a dominant player in the consumer goods sector with strong brands such as Tide and Gillette, growth is slowing, and the stock appears to be undervalued. Trading at a price-to-earnings (P/E) ratio of 23.7, the shares may not yield much at current levels.
Whether you are a beginner investor or an experienced trader, use it Invest Pro It can open up a world of investment opportunities by reducing risks in a difficult market backdrop.
• ProPicks AI: AI-selected stock winners with a proven track record.
• InvestingPro Fair Value: Know instantly whether a stock is undervalued or overvalued.
• Advanced stock filter: Search for the best stocks based on hundreds of selected filters and criteria.
• Main ideas:- See what billionaire investors like Warren Buffett, Michael Barry and George Soros buy.
Disclosure: At the time of this writing, I am long the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF ( SPY ) and the Invesco QQQ Trust ETF ( QQQ ). I am also long Invesco Top QQQ ETF (QBIG), Invesco S&P 500 Equal Weight ETF (RSP) and VanEck Vectors Semiconductor ETF (SMH).
I regularly adjust my portfolio of private stocks and ETFs based on an ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views expressed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv For more stock market analysis and insight.
