3 things to watch on the stock market this week

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Stocks rose in the final week of 2021 to cap another solid year for the indices. the Dow Jones Industrial Average (DJINDICES: ^ DJI) gained 19% for the year, and the S&P 500 (SNPINDEX: ^ GSPC) added 27%. Both indices finished near historic highs.

Several big name stocks will be announcing their results in the coming week, and below we’ll take a look at those in the pipeline. Constellation brands (NYSE: STZ), Bed bath and beyond (NASDAQ: BBBY), and WD-40 (NASDAQ: WDFC).

Image source: Getty Images.

1. Growth rate of Constellation brands

Demand is changing in the alcoholic beverage industry, and that fact means investors will be watching Thursday’s earnings report from Constellation Brands. The owner of imported beer brands like Corona lagged the market in 2021 thanks to slower growth and difficulty restarting its wines and spirits division. But there are also some bright spots in the business.

Sales trends remained strong in the previous quarter despite the collapse in demand for seltzer water and a rapid return to consumption in bars and restaurants. Sales increased by 7%, which is a slight slowdown compared to the sudden deceleration this rival Boston beer (NYSE: SAM) saw.

Investors are hoping Constellation’s larger portfolio will allow it to continue growing its brewing business at an annual rate of around 10% this year. Rising prices are also expected to start increasing profit margins in the next quarter. And management is also likely to hint at the potential for accelerating growth to come, in part due to strong demand for recreational marijuana.

2. Bed Bath & Beyond customer traffic

Enthusiasm passed out around Bed Bath & Beyond’s stock in recent months. After reaching meme stock status and nearly tripling in 2021, stocks are now well behind the market ahead of its third quarter earnings report. Shareholders are hoping for better news in the announcement, which covers the start of the critical holiday shopping season.

The specialty retailer revealed a drop in customer traffic in its last update in late September, and those trends helped Wall Street brace for bad news Thursday morning. After all, weaker sales at existing locations will likely be made worse by the store’s shrinking footprint.

The leaders aim to reduce the costs of Bed Bath & Beyond by reducing this portfolio. The focus on housewares could also help it capitalize on growth in this category. But the stock won’t be a winner in the long run, unless the company shows a path of recovery that includes steadily increasing sales in addition to a rebound in profit margins.

3. The new perspectives of WD-40

Investors have big questions ahead of Thursday’s WD-40 earnings report. The maker of chemical solvents, lubricants and cleaning products disappointed Wall Street in its latest announcement, revealing in mid-October that sales had risen just 3% in the fiscal fourth quarter. “The dynamics of the pandemic continue to create abnormal fluctuations in our net selling results from period to period,” CEO Garry Ridge said in a press release at the time.

The main challenge for investors is to look beyond these short-term fluctuations to judge the greater potential of WD-40. Sales are expected to increase between 7% and 11% in fiscal 2022, management said, from 19% last year. growth peak. We will have an update to this forecast on Thursday that reflects all the latest demand and supply chain data.

An upgrade in the outlook could push stocks higher, given the stock’s weak performance over the past year. But most Wall Street pros don’t expect the WD-40 to return to nearly 20% annual sales gains in 2022.

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* Returns of the portfolio advisor as of December 16, 2021

Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns and recommends the Constellation brands. The Motley Fool recommends Boston beer. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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