US stocks closed higher on Friday to cap a winning week and month, with the and the benchmark index both hitting new record highs.
For the week, the Dow Jones rose 1.4%, while the S&P 500 and the technology-heavy , each gained around 1.1%.
Source: Investing.com
Friday capped a strong month on Wall Street amid the post-election rally driven by President-elect Donald Trump's victory. In November, the Dow jumped 7.5% and the S&P 500 rose 5.7%, their biggest monthly gains of 2024. The Nasdaq rose 6.2% over the period.
The coming week is expected to be eventful as investors continue to evaluate the Fed's interest rate outlook. Fed funds futures currently project a 68% chance that the central bank will cut rates by 25 basis points at its December meeting, according to Investing.com.
Source: Investing.com
Biggest on the economic calendar will be November's U.S. jobs report, which is expected to show the economy added 202,000 jobs, compared to growth of 12,000 jobs in October. The unemployment rate is expected to increase from 4.1% to 4.2%.
These numbers will be accompanied by a packed schedule of Fed speakers, including Chairman Jerome Powell on Wednesday afternoon.
Elsewhere, next week's earnings schedule includes reports from a few major companies. These include Salesforce (NYSE:), Okta (NASDAQ:), Ulta Beauty (NASDAQ:), Lululemon (NASDAQ:), Dollar General (NYSE:), Dollar Tree (NASDAQ:), Kroger (NYSE:) and Chewy (NYSE:).
Regardless of which direction the market is heading, below I highlight one stock that may be in demand and another that could see further decline. Please remember though that my time horizon is only for the coming week, from Monday December 2nd to Friday December 6th.
Stock to buy: Robinhood
Robinhood (NASDAQ:) stands out as a stock to buy this week, as the popular commission-free trading platform is set to host its highly anticipated Investor Day, where management will unveil its vision for the future.
Investors expect details on growth initiatives in brokerage, crypto and global markets, as well as updates on new products such as index options, futures and the Robinhood Legend desktop platform.
These initiatives underline Robinhood's ambition to consolidate its position in the market and attract a broader investor base.
Source: InvestingPro
It's worth mentioning that InvestingPro's AI-driven quantitative model gives Robinhood an excellent “financial health score” of 4.0 out of 5.0. The company's strong momentum is supported by increasing revenues and the resurgence of retail.
Post-election retail momentum and favorable regulatory headwinds to cryptocurrency trading growth further support its bullish outlook.
In recent years, Robinhood has diversified its revenue streams, expanded internationally and implemented cost-cutting measures, including a stock buyback program.
HOOD stock ended Friday's session at $37.54, slightly below its record high of $39.74 reached on November 25. At current levels, the Menlo Park, Calif.-based retail brokerage firm has a market cap of $33.2 billion.
Source: Investing.com
Despite rising 194% year-to-date, analysts believe there is room for continued growth, citing Robinhood's undervalued valuation. According to data from InvestingPro, HOOD trades at a reduced EV-to-sales ratio of 11x compared to peers like Interactive Brokers (NASDAQ:) (14.5x) and Coinbase (NASDAQ:) (13.6x).
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Stock for sale: Dollar General
On the other hand, Dollar General faces increasing challenges. The discount retailer is scheduled to release its third-quarter earnings report Thursday morning at 6:55 a.m. ET, but expectations are grim. Declining attendance, rising costs and shrinking margins are expected to weigh heavily on results.
Underscoring the many challenges facing Dollar General, all 23 analysts surveyed by InvestingPro reduced their earnings estimates ahead of the report's release to reflect a 37% decline from their initial expectations.
Source: InvestingPro
According to the options market, traders are expecting a 10.3% move one way or the other for DG stock following the release.
Earnings have been the catalyst for big swings in stocks this year, according to data from InvestingPro. Notably, DG plunged 33% when the company reported its latest quarterly numbers at the end of August, suffering its eighth consecutive earnings day negative reaction.
For the quarter, earnings per share are expected to fall 25.4% from a year earlier to $0.94, marking the company's sixth consecutive quarter of double-digit earnings declines. Revenue growth, while up 4.4% annually to $10.1 billion, was not enough to offset falling margins and rising operating costs.
Dollar General's future prospects are equally concerning. Management is expected to give cautious guidance for the critical holiday season, reflecting weak consumer demand for discretionary goods and continued cost pressures. Despite initiatives such as the introduction of new merchandise categories, results have yet to show significant improvement.
The once-reliable discount retailer's business model is teetering under the weight of declining customer traffic, rising costs and fierce competition from industry giants like Walmart and Amazon. ).
DG stock ended Friday's session at $77.27, not far from a recent 52-week low of $72.12, a level not seen since September 2017. At current valuations, Dollar General has a market capitalization of $17 billion, making it the largest dollar store chain in the country, ahead of Dollar Tree.
Source: Investing.com
Shares have fallen 43.1% year to date, reflecting the growing pessimism surrounding the stock.
It's worth noting that Dollar General currently has a below-average InvestingPro Financial Health Score of 2.3 out of 5.0, highlighting its vulnerability to macroeconomic headwinds and its inability to keep pace with larger, more competitive competitors. more diverse.
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Warning : At the time of writing, I am long the S&P 500 and through the SPDR® S&P 500 ETF and the Invesco QQQ Trust ETF. I am also long the Technology Select Sector SPDR ETF (NYSE:).
I regularly rebalance my portfolio of individual stocks and ETFs based on an ongoing assessment of risks related to the macroeconomic environment and the financial situation of companies.
The opinions expressed in this article are those of the author alone and should not be considered investment advice.
