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Motley Fool Issues Rare “All In” Buy Alert
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The stock market will close on Thursday for Thanksgiving and have just a half-day of trading on Friday. As a result, many investors are simply tuning out for the entire week, figuring they can start paying attention again after a long weekend.
However, there are a few key companies that are reporting their financial results, and what they say will tell those who are paying attention a lot about the state of their respective industries and of investor sentiment more broadly. Here’s some information about two stocks that you should watch this week, with an eye toward figuring out whether one can keep moving forward and the other can regain its lost momentum.
Farm equipment manufacturer Deere (DE -0.62%) is set to report its fiscal fourth-quarter financial results before the market opens on Wednesday, Nov. 23. Unlike many stocks in 2022’s bear market, Deere has managed to move higher so far this year, and investors want to see whether the maker of tractors and other heavy equipment can keep taking advantage of favorable industry tailwinds that are helping its customers.
Deere’s financial performance has been outstanding recently. In its fiscal third-quarter results for the period ending July 31, revenue jumped 22% year over year on a 25% rise in equipment sales. Net income moved higher by 13%, with earnings per share enjoying a 16% boost from year-ago levels. Deere got solid gains from its small agriculture and turf segment, with construction and forestry equipment results showing more modest growth.
Yet Deere’s biggest contributor to long-term growth lately has been its production and precision agriculture segment. Investors need to understand that as much as farm equipment might seem rooted in the old economy, technological innovation has changed the way farmers do their jobs. For instance, by using GPS technology, Deere’s equipment can build a detailed map of a farmer’s land, making subsequent operations more efficient.
Investors are looking for sizable year-over-year earnings gains from Deere to finish its 2022 fiscal year, and they hope to see continued mid-teen percentage growth in its bottom line in fiscal 2023. That could prove to be just the beginning of a multi-decade path to long-term growth for Deere.
Elsewhere, shares of Nordstrom (JWN -0.84%) haven’t seen the same success that Deere shareholders have enjoyed. Yet shareholders in the well-regarded department store retailer hope that when the company reports its latest financial results after the closing bell on Tuesday, Nov. 22, Nordstrom will confirm what some of its retail stock peers have said lately about the current industry environment.
Nordstrom’s investors aren’t expecting to see much good news in the report for the fiscal third quarter that ended Oct. 31. Most of those following the stock anticipate that sales will sag from year-ago levels, and massive pressure on costs along with substantial promotional activity to clear out inventory could cause earnings to fall by half or more year over year.
Nordstrom has a lot to say to retail investors, because its stores offer two very different perspectives on the economic condition of its shopper base. On one hand, its high-end, full-price namesake stores have greater exposure to luxury shoppers, whose economic fortunes are arguably less sensitive to swings in the economy. On the other hand, its Nordstrom Rack off-price discount stores cater to shoppers of more modest means, and their behavior will tell shareholders whether consumers are trading down from higher-end to lower-end stores and pulling back on spending activity more broadly.
Deere and Nordstrom aren’t stocks that most investors tend to follow. Yet what they have to say will be especially important as the holiday shopping season gets off to its official start and winter approaches for much of the Farm Belt. Take a few minutes out of your Thanksgiving week schedule to see what the two companies tell their investors.
Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends Deere & Company. The Motley Fool has a disclosure policy.
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