Is The Semiconductor Shortage Easing? Investing Action Plan

Here’s your Investing Action Plan: what you need to know as an investor for the coming week. Important data points on the health of the computer chipmaking industry are due. Strong demand for semiconductors drove shortages across many sectors. Investors will also continue to weigh earnings reports against future actions of the Federal Reserve.


Stocks To Watch

Your stocks to watch this week come from an array of industries, reflecting the market’s current broad leadership. Microsoft (MSFT) is finding support at its 10-week line as it carves a new flat base. Chipotle Mexican Grill (CMG) has rebounded bullishly from its 10-week line and is at the top of a long tight pattern. Wells Fargo (WFC) is flashing early entries as it moves up a new consolidation. O’Reilly Auto (ORLY) has broken out of a base-on-base formation. Marriott (MAR) has tripped some early entries as declining Covid cases buoy travel-related stocks.

Micron Earnings Seen Rising 116%

Memory-chip maker Micron Technology (MU) will report its fiscal Q4 results late Tuesday. Analysts expect the Boise, Idaho-based company to earn $2.33 a share on sales of $8.22 billion. That would translate to year-over-year growth of 116% in earnings and 36% in sales. It would be Micron’s third straight quarter of triple-digit earnings growth. Investors likely will key on supply-and-demand dynamics and chip pricing. Micron stock has been under pressure since early August when market research firm TrendForce forecast weakening prices for PC memory chips in Q4. It cited high inventories of dynamic random-access memory, or DRAM, chips in the supply chain.

Jabil Earnings Slowdown Seen

Contract manufacturer Jabil (JBL) plans to report its fiscal fourth-quarter results early Wednesday. Wall Street is forecasting Jabil earnings of $1.38 a share on sales of $7.67 billion. That would translate to year-over-year growth of 41% in earnings and 5% in sales. If Jabil hits those numbers, it would be a significant deceleration in earnings and sales growth for the St. Petersburg, Fla.-based company. Jabil provides manufacturing services for 5G infrastructure, electric vehicles, health care, cloud computing, clean energy, and environmentally friendly packaging, to name a few markets.

CarMax To Report Q2 earnings

Used-car dealer CarMax (KMX) will report results before the market open on Thursday, amid soaring prices for used vehicles as chip shortages hamper new-car production. FactSet analysts see earnings of $1.84 per share, just 3% above the year-ago period. Sales are seen increasing 26% to $6.77 billion. CarMax opened two stores last quarter, bringing the total to 222. KMX stock is in range from a 140.05 buy point from a cup base.

Financial Data Firms Report

Financial data firms FactSet (FDS) and IHS Markit (INFO) report earnings on Tuesday. Wall Street expects FactSet to earn $2.73 per share, down 5%, with revenue up 5% to $405 million. IHS Markit’s earnings were seen increasing 8% to 83 cents on revenue up 9% to $1.17 billion. The results come as demand rises for financial data in rapidly-moving markets, and as S&P Global (SPGI) tries to finalize it buy of IHS. The companies last month agreed to sell some of IHS’ services to News Corp. (NWSA) in an effort toward regulatory approval. 

Struggles Continue At Aurora

Canadian cannabis producer Aurora Cannabis (ACB) reports fiscal Q4 earnings on Monday. Wall Street expects a per-share loss of 27 cents, as sales slide 22% to $56.4 million, according to FactSet. The results for the company arrive after it pushed back the date of its Q4 results without explanation, and later said it would close a facility and lay off around 8% of its workforce as a result. The cutbacks were the latest for Aurora and within Canada’s marijuana industry, which has suffered from losses and overexpansion.

Economic Data Coming

After a weighty Fed week, the coming week’s economic data won’t pack much of a punch. But a few things are worth paying attention to. The durable goods report, out Monday at 8:30 a.m., will feature the August read on orders of nondefense capital goods, excluding aircraft. That’s a proxy for capital spending, among the strengths of the recovery. Thursday morning’s update on new jobless claims will have more importance after the past two weeks have shown rising claims, reaching 351,000 in the week of Sept. 18 vs. 312,000 two weeks earlier.

On Friday, we’ll see August personal income and spending data. That adds spending on services to the retail sales report’s focus on goods. We’ll get a better idea of how much the delta variant reined in the service economy. That report also will update the Federal Reserve’s preferred inflation measure, the PCE (personal consumption expenditures) price index. UBS economists noted that different methodology for airfares than the CPI report could lead to a higher reading for PCE inflation in August.

In Brief

  • Bed Bath & Beyond (BBBY), a retailer of home goods, is expected to report 4% higher fiscal Q2 of 52 cents a share on Thursday. Quarterly revenue is seen falling more than 20% to $2.06 billion. Bed Bath & Beyond shares spiked earlier this year as so-called Meme investors traded it.
  • Cintas (CTAS), a provider of corporate uniforms, is seen posting 1% lower fiscal Q1 profit of $2.75 a share on Wednesday. Revenue is expected to rise more than 7.5% to $1.88 billion.
  • Paychex (PAYX) early Thursday is likely to post a 27% EPS increase to 80 cents as sales climb 12% to $1.042 billion. The payroll services provider saw both earnings and sales growth quicken the prior quarter as pandemic headwinds eased, with businesses reopening and ramping up hiring. But in June, Paychex CEO Martin Mucci said multiple challenges continue to weigh on the job market and forecast that hiring would pick up again in the fall.
  • TD Synnex (SNX), a tech systems distributor, is expected to report a 37% decline in adjusted Q3 profit per share of $2.07 on Tuesday. Revenue during the quarter is seen more than doubling to $14.2 billion.
  • Thor Industries (THO), an RV maker, reports earnings for its fiscal Q4 ended July 31 before Tuesday’s opening bell. Analysts expect EPS of $2.91, up 36% from the Covid-hit year-ago quarter. Sales are seen growing 43% to $3.33 billion, according to Zack’s Investment Research. The impact of the chip shortage is a wild card.


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