My top 10 things to watch Monday, Aug. 26
1. Wall Street is headed for a muted open Monday. After a strong week, the S&P 500 is entering the session less than 1% from its mid-July all-time high. On Friday, Federal Reserve Chair Jerome Powell indicated an interest rate cut was on the horizon. We’ll get the latest reading of the Fed’s favorite inflation gauge on Friday.
2. The most-hyped event of the week: Club holding Nvidia’s earnings report Wednesday night. Shares of the leading AI chipmaker have been on a wild ride this month, and expectations are high as they’ve been during the past year and a half. But, as I explained in my Sunday column for Investing Club members, the Nvidia story remains stellar even if these upcoming numbers fail to wow.
3. Wells Fargo upped its price target on Club holding Amazon to $232 a share from $225 as part of a note exploring the e-commerce and cloud computing giant’s Kuiper satellite internet service. Analysts lowered their operating income forecasts for 2025 through 2027 to factor in Kuiper costs. While analysts argue the long-term opportunity is attractive, they said investors would appreciate more insight on the strategic rationale of Kuiper.
4. PDD Holdings is getting crushed after the owner of the Pinduoduo and Temu online shopping platforms reported worse-than-expected quarterly revenues. We know Chinese consumers have been weak, and the company on Monday cited intensified competition as a headwind to sales growth going forward. Has Temu, which was all the rage earlier this year, peaked?
5. Morgan Stanley initiated coverage of cement supplier Summit Materials with a buy-equivalent rating and boosted its price target on peer Martin Marietta Materials to $657 a share from $610. As part of their optimism on both stocks, analysts referenced a so-called “super cycle” for cement. Oh no. The curse of the super cycle.
6. Cava‘s multi-regional success is continuing, according to JPMorgan, but so is the firm’s neutral rating on the stock. The Mediterranean fast casual chain reported strong earnings and upped its full-year outlook last week. While analysts believe Cava will be able to go national, they argue its stock is already factoring in a lot of the future growth.
7. Morgan Stanley lowered its price target on Constellation Brands to $280 a share from $305, citing concerns about beer depletions and earnings based on a soft batch of scanner data. Analysts defended the long-term outlook for the Modelo and Corona parent, though, and kept their buy-equivalent rating on the stock. We own Constellation for the Club, but the stock has struggled to gain traction. We’re hoping that once its current capex cycle is completed, the company can return more excess cash to investors.
8. The proposed merger of Kroger and Albertsons, which was first announced in 2022, is going to court Monday, with a federal judge considering whether to grant the Federal Trade Commission’s request for a preliminary injunction. The grocery companies argue the tie-up will help them better compete with Club holding Costco and Walmart. This is a big test for Biden administration’s more aggressive stance on antitrust enforcement.
9. Costco opened a new store in Okinawa’s Nanjo City over the weekend, and photos show massive crowds waiting to get into the warehouse. This is Costco’s first location on the island of Okinawa, according to Stars and Stripes. There is a need for so many stores.
10. An odd one: Baird named Planet Fitness a “bullish fresh pick” through year-end. Analysts have price target of $92 a share, which seems high for a stock currently at $81. In any case, they see a number of drivers for the stock into 2025, including better marketing.
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