Breaking News
Get 40% Off 0
Is NVDA a 🟢 buy or 🔴 sell? Unlock Now

1 Stock to Buy, 1 Stock to Sell This Week: Costco, ExxonMobil

By Investing.com (Jesse Cohen)Stock MarketsDec 10, 2023 12:54
uk.investing.com/analysis/1-stock-to-buy-1-stock-to-sell-this-week-costco-exxonmobil-200595685
1 Stock to Buy, 1 Stock to Sell This Week: Costco, ExxonMobil
By Investing.com (Jesse Cohen)   |  Dec 10, 2023 12:54
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
COST
+1.57%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
XOM
-0.09%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
  • Fed meeting, CPI inflation, and retail sales will be in focus this week.
  • Costco stock is a buy with Q3 earnings, guidance beat on deck.
  • ExxonMobil shares are a sell amid ongoing slump in energy prices.
  • Looking for more actionable trade ideas to navigate the current market volatility? Members of InvestingPro get exclusive ideas and guidance to navigate any climate. Learn More »

Stocks on Wall Street finished higher on Friday to notch another winning week after a robust U.S. jobs report fueled investor optimism about a soft landing for the economy.

The S&P 500's close was its highest since March 2022, while the Nasdaq's close was its highest since April 2022.

S&P 500 vs. Nasdaq vs. Dow
S&P 500 vs. Nasdaq vs. Dow

For the week, the blue-chip Dow Jones Industrial Average rose about 0.1%, the benchmark S&P 500 advanced 0.2%, and the tech-heavy Nasdaq Composite tacked on 0.7%.

It marked the sixth straight week of gains for the major averages, the longest such winning streak since 2019.

The week ahead is expected to be another volatile one, as investors brace for two of the biggest economic events that remain for 2023.

The Federal Reserve will announce its rate decision at its last meeting of the year on Wednesday. After raising borrowing costs by 525 basis points since March 2022, the Fed is widely expected to keep interest rates unchanged for the third meeting in a row as policymakers assess signs of economic softening.

Fed Chair Jerome Powell’s comments on the pace of future rate increases will be in focus as investors believe the U.S. central bank is all done tightening and could even start cutting rates as early as next spring.

Weekly Calendar Events
Weekly Calendar Events

Meanwhile, on the economic calendar, most important will be Tuesday’s U.S. consumer price inflation report for November, which is forecast to show annual CPI rising 3.1%, slowing from the 3.2% increase recorded in October.

In addition to the Fed and the CPI report, the latest retail sales data will also be closely watched this week.

Elsewhere, some of the key earnings reports to watch include updates from Oracle (NYSE:ORCL), Adobe (NASDAQ:ADBE), Costco, Lennar (NYSE:LEN), and Darden Restaurants (NYSE:DRI) as Wall Street’s Q3 reporting season draws to a close.

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, December 11 - Friday, December 15.

Stock to Buy: Costco

After closing at a new record high on Friday, I believe Costco's (NASDAQ:COST) stock will outperform this week as the membership-based warehouse club’s latest financial results will easily top estimates thanks to favorable consumer demand trends.

The Issaquah, Washington-based warehouse retailer is scheduled to deliver its fiscal first quarter update after the U.S. market closes on Thursday at 4:15PM ET.

According to the options market, traders are pricing in a swing of around 3% in either direction for COST stock following the report. Shares inched up about 1% after the company’s last earnings report in late September.

Despite a challenging environment for retailers, I reckon Costco is also poised to deliver upbeat guidance as it continues to benefit from changes in frugal consumer behavior amid the current economic backdrop.

In addition, many market participants have speculated about a much-expected membership fee increase, which could finally come this quarter. Currently, the typical annual Costco membership costs $60, while the higher-tier ‘Executive Membership’ costs $120, and includes some additional perks.

Costco is seen earning $3.42 per share, up 11.4% from EPS of $3.07 in the year-ago period. If confirmed, that would mark the fourth straight quarter of double-digit gains in quarterly profit.

Meanwhile, revenue is forecast to climb 6.1% annually to $57.7 billion, reflecting strong grocery sales and favorable membership trends.

Costco Earnings Forecast
Costco Earnings Forecast

As such, fiscal Q1 U.S. same-store sales - which grew 3.1% in the previous quarter excluding changes in gas prices - will likely top estimates as American consumers flocked to the wholesale retailer’s stores to find attractive deals and bargains.

Indeed, Costco had 71 million paid household members as of the end of September, up nearly 8% year over year.

COST stock ended Friday’s session at $610.78, its highest ever closing price. With a market cap of $271 billion, Costco is the world’s second most valuable brick-and-mortar retailer, trailing only Walmart (NYSE:WMT).

Costco Chart
Costco Chart

Costco has stood apart from other retailers this year, with shares rising 33.8% year-to-date. That compares to an increase of 11% recorded by the SPDR® S&P Retail ETF (NYSE:XRT), which tracks a broad-based, equal-weighted index of U.S. retail companies in the S&P 500.

Stock to Sell: ExxonMobil

I believe ExxonMobil (NYSE:XOM) shares will suffer a challenging week ahead as investors fret over falling energy prices due to sluggish global demand amid the increasingly uncertain economic climate.

Crude oil futures suffered their seventh straight weekly decline on Friday, the longest streak of weekly losses in almost half a decade, due to lingering fears about a global supply surplus at a time when global oil demand appears to be stalling.

The U.S. WTI oil futures contract fell to $68.80 per barrel on Thursday, its lowest since late June, while Brent crude futures, the global benchmark, also fell to a six-month trough.

U.S. WTI Oil Chart
U.S. WTI Oil Chart

Despite sizable losses, I reckon there is still more downside on the horizon given the downbeat near-term outlook for global oil demand, combined with weak underlying fundamentals and fragile chart technicals.

Concerns that supply will outstrip demand have weighed on energy prices in recent weeks amid worries that OPEC+ members will sidestep their voluntary pledge to collectively cut production by 2.2 million barrels per day early next year.

That comes as U.S. crude production was near record highs of over 13 million barrels per day in the week to Dec. 1, threatening to exacerbate oversupply concerns.

XOM stock ended Friday’s session at $99.54, after falling to a nine-month low of $98.09 on Thursday, a level last seen on March 3.

ExxonMobil Chart
ExxonMobil Chart

It should be noted that from a technical standpoint, ExxonMobil shares remain below both their 50-day and 200-day moving averages, which usually signals more losses ahead.

After an upbeat start to the year, the global energy giant has come under heavy selling pressure in recent weeks, which saw it wipe out its gains for the year.

With three weeks left in 2023, XOM shares are down 9.8% year-to-date, and are 17.5% below their all-time high of $120.70 reached in late September.

The Irving, Texas-based ‘Big Oil’ company has a market cap of $397.9 billion at its current valuation, making it the largest U.S. oil producer and the 15th most valuable public company in the world.

Be sure to check out InvestingPro to stay in sync with the latest market trends and what they mean for your trading decisions.

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 (SPY (NYSE:SPY)), and the Invesco QQQ Trust ETF (QQQ). 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.

1 Stock to Buy, 1 Stock to Sell This Week: Costco, ExxonMobil
 

Related Articles

Edison Group
1Spatial: Landmark 1Streetworks Contract By Edison Group - Feb 22, 2024

SPA has announced that following a successful trial, UK Power Networks has signed a contract to deploy 1Streetworks, 1Spatial PLC (LON:SPA)’s traffic plan automation application....

1 Stock to Buy, 1 Stock to Sell This Week: Costco, ExxonMobil

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email