U.S. stocks closed higher on Friday to cap off a winning week, as the blue-chip Dow Jones Industrial Average ended at a new record.
For the week, the S&P 500 and the tech-heavy Nasdaq Composite each gained about 1.7%, while the Dow climbed roughly 2%.
Source: Investing.com
With the Thanksgiving holiday just around the corner, Wall Street will have a shortened week of trading ahead. The stock market will remain shut on Thanksgiving Day Thursday and will close early at 1:00PM ET on Friday.
There will, however, be a full slate of economic data releases coming out in the days prior as investors continue to weigh the Fed’s rate plans for the months ahead.
Source: Investing.com
On the economic calendar, most important will be the personal consumption expenditures (PCE) price index, which is the Fed’s preferred inflation measure.
That will be accompanied by the minutes of the Federal Reserve’s November FOMC meeting. Expectations for a December rate cut have diminished lately, with the likelihood now at 54%, a sharp drop from 85% just a week earlier.
Meanwhile, the reporting season’s last big week sees earnings roll in from several retailers such as Best Buy (NYSE:BBY), Macy’s (NYSE:M), Nordstrom (NYSE:JWN), Burlington Stores (NYSE:BURL), Kohl’s (NYSE:KSS), Dick’s Sporting Goods (NYSE:DKS), and Abercrombie & Fitch (NYSE:ANF). Other notable companies include CrowdStrike (NASDAQ:CRWD), Dell Technologies (NYSE:DELL), HP (NYSE:HPQ), Zoom Video (NASDAQ:ZM), Workday (NASDAQ:WDAY), and Autodesk (NASDAQ:ADSK).
Regardless of which direction the market goes, below I highlight one stock likely to be in demand and another which could see fresh downside. Remember though, my timeframe is just for the week ahead, Monday, November 25 – Friday, November 29.
Burlington Stores stands out as a top buy this week, as the off-price department store retailer’s third quarter earnings report will likely beat estimates thanks to favorable consumer demand trends and an improving fundamental outlook.
Burlington, the third-largest off-price retailer in the U.S. behind TJX Companies (NYSE:TJX) and Ross Stores (NASDAQ:ROST), is set to report its Q3 results on Tuesday at 6:45 AM ET.
Market participants expect a sizable swing in BURL shares following the print, as per the options market, with a possible implied move of 8.4% in either direction.
Source: InvestingPro
Optimism surrounding Burlington’s performance is underscored by 18 upward profit revisions in the past three months, compared to just two downward adjustments. This reflects growing confidence in its ability to navigate macroeconomic challenges, aided by a robust supply chain strategy and expanded inventory.
Analysts expect strong numbers, with adjusted profit forecasted to jump 58% year-over-year to $1.55 per share and revenue projected to grow 12% to $2.55 billion.
Burlington has firmly positioned itself as a leader in the off-price retail sector, leveraging its ability to offer value-driven products to price-conscious shoppers. As the retailer continues to attract budget-conscious consumers, it remains a compelling investment ahead of the critical holiday shopping season.
BURL stock ended Friday’s session at a fresh 52-week high of $286.17, the strongest level since January 2022. At current levels, Burlington has a market cap of $18 billion.
Year-to-date, BURL stock has surged 47.2%, reflecting its ability to navigate the challenging retail environment.
Source: Investing.com
It is worth mentioning that InvestingPro’s AI-powered quantitative model rates Burlington with a solid ‘Financial Health Score’ of 2.7 out of 5.0, supported by strong earnings growth, an agile business model, and a rising stock price.
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Kohl’s, on the other hand, is grappling with a tougher retail environment as it struggles with operational inefficiencies and poor consumer demand. The department store chain’s heavy reliance on discounting has eroded profitability, while weak demand for discretionary items underscores broader challenges.
Kohl’s, which operates over 1,100 stores across the U.S., is scheduled to release its third quarter earnings report ahead of the opening bell on Tuesday at 7:00AM ET.
According to the options market, traders are pricing in a swing of 12.7% in either direction for KSS stock following the print.
Source: InvestingPro
Wall Street projects earnings of $0.28 per share, marking a sharp decline of 47.2% from EPS of $0.53 a year earlier. Revenue is anticipated to fall 3.6% to $3.70 billion.
Despite efforts to revamp its product offerings with categories like home décor, gifts, and pet goods, Kohl’s has struggled to offset higher costs and shrinking margins.
Given these challenges, CEO Tom Kingsbury, who previously led Burlington, may strike a cautious tone on the outlook for the crucial holiday season, further dampening sentiment.
KSS stock closed at $17.03 on Friday after falling to $16.12 the day before, which was the lowest closing price since March 2020. At its current valuation, the Wisconsin-based department store retailer has a market cap of $1.9 billion.
Source: Investing.com
Shares have plummeted 40.6% year-to-date, reflecting mounting investor concerns about Kohl’s long-term prospects as it struggles to adapt to the evolving retail landscape.
It should be noted that Kohl’s currently has a below average InvestingPro ‘Financial Health Score’ of 2.1 out of 5.0 due to accelerating concerns over weakening profit margins and spotty sales growth.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF, and the Invesco QQQ Trust ETF. I am also long on the Technology Select Sector SPDR ETF (NYSE:XLK).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views discussed 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.
