5 Stocks Setting Up for BIG MOVES in December

Several companies are slated to announce their quarterly results this week. Amid the holiday season, two industries to particularly watch out for are retail and software, as analysts expect strong earnings.

The software industry particularly has had a good run this year, however, their bullishness has slowed down in recent weeks due to valuation concerns and the positive vaccine news. In contrast, the retail sector was hit hard by the spread of the pandemic, however, it has recovered over the last few weeks primarily because of the holiday season and investors’ optimism over the return to normal with the arrival of coronavirus vaccines.

It will be interesting to see how companies in these sectors performed in the third quarter. Salesforce.com, Inc. (CRM), Dollar General Corporation (DG), Splunk, Inc. (SPLK), CrowdStrike Holdings, Inc. (CRWD), and Ulta Beauty, Inc. (ULTA) have done exceptionally well this year. They reported better than expected results in the previous quarter, and the trend could have continued in the last reported quarter as well. Analysts estimate these companies to deliver year-over-year growth in revenues and earnings in their upcoming results, which should translate into solid price momentum in the near term.

Salesforce.com, Inc. (CRM)

CRM provides cloud computing solutions for businesses. The company’s primary focus is on customer relationship management. CRM’s stock has gained 52.2% so far this year.

The company recently announced that its artificial intelligence powered Salesforce Einstein now delivers more than 80 billion predictions per day across all solutions. The company has also launched Revenue Cloud, aimed at helping businesses maximize its revenues.

For the second quarter that ended July 2020, the company reported an increase in revenue of 29% compared to the same period last year. For the third quarter, the company expects revenue to increase approximately 16% year-over-year.

The company is scheduled to release its quarterly results on December 1st. Analysts estimate CRM’s revenue to grow 16.3% year-over-year for the quarter that ended October 2020, and 21.7% in 2021. The company’s EPS is expected to remain stable at $0.75 for the about-to-be-reported quarter, rise 25.4% in 2021, and at a rate of 16.7% per annum over the next five years.

How does CRM stack up for the POWR Ratings?

A for Trade Grade

B for Buy & Hold Grade

B for Industry Rank

B for Overall POWR Rating

The stock is also ranked #20 out of 48 stocks in the Software - Business industry.

Dollar General Corporation (DG)

DG operates as a discount retailer. The company retails a diverse range of products including consumables, clothing, home products and more. The company’s stock has gained 39.7% so far this year.

For this holiday season, the company announced a range of measures that would make it safer for customers to shop. The company provided pick-up services, a cart calculator, among other allied services.

For the second quarter that ended July 2020, the company reported an increase in net sales of 24.4%, compared to the same period last year. The operating profit increased 80% to $1 billion.

DG is expected to report its latest earnings on December, 3rd. DG is estimated to see a revenue increase of 16.2% for the quarter that ended October 2020, and 19.7% in 2021. The company’s EPS is expected to rise 38.7% for the quarter, and at a rate of 14.8% per annum over the next five years.

It’s no surprise that DG is rated a “Strong Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade, Buy & Hold Grade, and Industry Rank. In the 18-stock Grocery/Big Box Retailer industry, it is ranked #4.

Splunk, Inc. (SPLK)

SPLK provides cloud solutions aimed at helping businesses analyze big data from websites, applications, servers, mobile apps, and more. SPLK’s stock has gained 36.2% so far this year.

The company recently announced the launch of Enhanced AIOps, along with multicloud monitoring capabilities. These new additions will help users with digital transformation through the cloud. The company has also recently completed the acquisition of Plumbr, which is an application performance monitoring (APM) company.

For the quarter that ended July 2020, the company’s revenue from cloud services increased 79% year-over-year. The company’s cloud ARR also saw an increase of 89% during the same period.

The company is expected to release its third quarter results on December 2nd. SPLK is estimated to see a revenue increase of 25% in 2022. The company’s EPS is expected to rise 263.6% in 2022, and at a rate of 4% per annum over the next five years.

SPLK’s strong fundamentals are reflected in its POWR Ratings. It has a “Buy” rating with an “B” for Trade Grade, Buy & Hold Grade, and Industry Rank. It is ranked #31 out of 96 stocks in the Software – Application industry.

CrowdStrike Holdings, Inc. (CRWD)

CRWD is a cybersecurity company that provides endpoint security, threat intelligence, and cyber attack response services. CRWD’s stock has gained 202.5% so far this year.

The company has recently announced that it is the launch partner for the AWS Network Firewall. This partnership will help bolster the network security of users of Amazon Web Services. The company has also added a situational awareness feature to their threat intelligence offering.

For the quarter that ended July, 2020, the company’s total revenue saw an increase of 84% compared to the same period last year. The company’s subscription revenue rose 89% during the same period.

CRWD has announced that it will be releasing its third quarter results on December 2nd. CRWD is estimated to see revenue growth of 69.9% for the quarter that ended October 2020, and 70.3% in 2021. The company’s EPS is expected to rise 100% for the quarter, and at a rate of 25% per annum over the next five years.

It’s no surprise that CRWD is rated a “Strong Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade, Buy & Hold Grade, and Peer Grade.

Ulta Beauty, Inc. (ULTA)

ULTA is a specialty retailer that sells cosmetic and beauty products. The company’s offerings include haircare products, skincare products, bath and body products, hair styling tools, and more. ULTA’s stock has gained 11.1% so far this year.

ULTA recently announced a strategic partnership with Target (TGT) through which ULTA will sell branded products through selected Target stores nationwide. This shop-in-shop concept is expected to synergize the offerings provided by both companies.

For the quarter that ended July, 2020, the company reported that sales from e-commerce rose 200% compared to the same period last year. The company also increased its retail square footage 4.2% during the same period.

ULTA is expected to release its third quarter earnings report on December, 3rd. ULTA is estimated to see revenue growth of 21.8% in 2022. The company’s EPS is expected to rise 211% in 2022 and at a rate of 1.1% per annum over the next five years.

ULTA’s strong fundamentals are reflected in its POWR Ratings. It has a “Buy” rating with an “A” for Trade Grade. It is ranked #9 out of 36 stocks in the Specialty Retailers industry.

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CRM shares were trading at $240.92 per share on Monday afternoon, down $6.71 (-2.71%). Year-to-date, CRM has gained 48.13%, versus a 13.88% rise in the benchmark S&P 500 index during the same period.

Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks.

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