Here’s your weekly Investing Action Plan: what you need to know as an investor for the coming week.
X Wall Street will pretty much be on ice during the week between Christmas and New Year’s Day. But investors will look for signs of a Bitcoin (BTC) rebound or a sustained sell-off. Retail stocks could also see some action, as early data on the holiday shopping season trickles out. And big dividend stocks could announce richer shareholder returns, now that the GOP’s tax cuts have been signed into law.
Stocks To Watch
Restaurant stocks, like other retail stocks, have rallied on expectations for lower corporate tax rates. A string of buyouts this year, especially private-equity deals for Buffalo Wild Wings (BLWD), Bob Evans Farms (BOBE) and Ruby Tuesday (RT), are also boosting shares. But income tax cuts for individuals could also spur more spending, including at fast-food chains.
Shares of Domino’s Pizza (DPZ) rallied 2.1% to 192.30 as they form a double-bottom base with a 211.85 buy point. By contrast, rival Papa John’s (PZZA) has gone the other way, and founder John Schnatter’s abrupt announcement that he’s stepping down as CEO is weighing further on shares.
Jack in the Box (JACK) slipped 0.3% to 99.96 but is forming a handle on a saucer base with a 108.65 buy point. On Tuesday, the company said it will sell its Qdoba Mexican chain to Apollo Global Management (APO) for $305 million, adding to the volatility seen in Jack in the Box shares lately.
Burger King parent Restaurant Brands International (QSR) was down 1.3% at 61.23, working on a flat base with a 68.99 buy point, though the stock remains below its 50-day average.
Bitcoin’s Judgment Week
After months of talk of a Bitcoin bubble, the week ahead seems likely to be a bigger test of whether the cryptocurrency is just that, or whether investors still believe in it after a brutal week that saw it plunge 30%. Also under the microscope will be other cryptocurrencies like Ethereum, Bitcoin Cash and Litecoin, which fell alongside Bitcoin Friday after gaining momentum as alternative crypto-plays. Another indicator of bullishness or bearishness is if more companies rebrand themselves out of the blue as blockchain companies, the way Long Island Iced Tea (LTEA) has done.
Post-Tax Cut Dividends, Buybacks, M&A?
The end of the year is typically a time for companies to announce plans to return capital to shareholders. But this year has the added juice of the GOP’s tax cuts, which are seen filtering through to shareholders in the form of dividend hikes and share buybacks. Another area that could heat up is mergers and acquisitions, as the tax windfall frees up more capital to offer handsome premiums on takeover targets. One possible deal to watch is something between Boeing (BA) and Embraer (ERJ). While Brazil’s president is opposed to Boeing taking control of the regional-jet maker, the U.S. aerospace giant is reportedly sweetening its terms as much as possible.
Over half of all shoppers are still out looking for gifts, and the National Retail Federation says “Super Saturday,” i.e. the Saturday right before Christmas, will likely be the “single biggest day of the year for retailers.” Package delivery services will also be busy trying to ensure that everyone receives their purchases ahead of Christmas on Monday. Adobe (ADBE) projected in November that U.S. online sales will reach $107.4 billion over the two-month holiday season. Watch for any updates from Adobe, NRF or other market trackers on whether the season beat or missed forecasts
The Energy Information Administration will report weekly domestic crude production and stockpile figures Thursday instead of Wednesday due to the Christmas holiday. U.S. output has hit record highs the past seven weeks and analysts expect production to hit 10 million barrels per day next year and reach the highest full-year average ever, surpassing the record set in 1970. Baker HughesBHGE will report weekly rig counts on Friday.