Which Stocks To Watch This Week

With the stock markets at all time highs and the weekend news of a passed infrastructure bill, equities could be in for another winning week.  Earnings season is nearing an end and we highlight which stocks to watch this week so you can make a profit.

Caterpillar Inc. $CAT – The global supply chain disruptions triggered by the pandemic and inflationary cost pressures have already hit the company’s earnings, forcing it to raise equipment prices twice this year to mitigate the blow.  Recently executives of the company lowered earnings estimates due to lower adjusted operating profit margin in the current quarter, compared with the third, though it expects sales to improve.  The impact on demand due to further price hikes, the company believes, are sustainable within the market due to very strong customer demand.  Technical Analysis shows a basing pattern which coincides with the longer term moving averages.  We expect to see $CAT move higher as sales increase along with infrastructure spending.   A move to $220-230 will “fill the gap” on the chart and put the stock in position test old highs around $245.  We rate Caterpillar Inc. a BUY with a 12 month $270 target price.

Beyond Meat $BYND – In late October the company cut its third-quarter revenue forecast, blaming a host of factors including a drop in demand from grocery stores and a labor shortage that led to delays in restocking shelves, shares then fell 15%.  Beyond Meat gets the bulk of its revenue from retailing which has suffered from a weakening trend of people stockpiling faux meat burgers and sausages at home as they started dining out.  It also said new orders from a distributor servicing one of the company’s large customers did not materialize, while severe weather caused damage to inventory stored at one of its facilities.  Beyond Meat’s forecast cut comes a few months after the company said its restaurant customers were placing more conservative orders due to uncertainty over to the Delta variant of the coronavirus.  Technical Analysis shows a gap down from the late October announcement and price has not recovered.  With the prospects of a weak profit report and forecast, we believe the stock will drop further.  Right now, the market value of $BYND is $6 Billion but considering the severity of the sales decline, we can see the stock drop further towards a $4 billion valuation.  We rate Beyond Meat a SELL with a $65 target price.  The company reports earnings on Wednesday.

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