US stocks rallied on Friday ahead of Donald Trump’s inauguration, while the Dow Jones Industrial Average and S&P 500 had their best week since the November election amid signs of easing inflation.
For the week, the Dow and S&P 500 advanced 3.7% and 2.9%, respectively, while the technology-rich Nasdaq Composite rose 2.5%.
Source: Investing.com
The week ahead is expected to be another eventful one as investors continue to assess the outlook for the economy and interest rates.
US markets will be closed on Monday for the Martin Luther King holiday. President-elect Trump’s inauguration will also be on Monday, and the new president is expected to issue a number of executive orders on his first day.
Source: Investing.com
Meanwhile, fourth-quarter earnings season is kicking into high gear, with reports expected from several prominent companies, including Netflix ( NASDAQ:NFLX ) , American Express ( NYSE:AXP ) , Procter & Gamble ( NYSE:PG ) , Johnson & Johnson ( NYSE:JNJ), Verizon (NYSE:VZ), GE Aerospace (NYSE:GE), 3M Company (NYSE:MMM), United Airlines (NASDAQ:UAL) and American Airlines (NASDAQ:AAL).
Bitcoin and cryptocurrencies will also be closely watched.
Regardless of which direction the market is headed, below I highlight one stock that is likely to be in demand and another that could see another decline. Remember, my time frame is only for the week ahead, Monday January 20th – Friday January 24th.
For investors looking to deploy capital this week, Netflix stands out as a strong upside opportunity. The streaming giant’s move into advertising, live events and monetization of popular content like the ‘Squid Game’ are significant tailwinds that could boost the stock in the week ahead.
The Los Gatos, Calif.-based Internet television network is scheduled to release a fourth-quarter update after the U.S. market closes Tuesday at 4:00 p.m. ET. A call with co-CEO Ted Sarandos and Greg Peters is scheduled for 5:00 PM ET.
Market participants are expecting a significant move in NFLX stock after the press release, according to the options market, with a possible implied move of nearly 9% in either direction. The stock rose 8.8% after its latest earnings report in mid-October.
Source: InvestingPro
Earnings estimates have been revised upwards 27 times in the past 90 days, reflecting increasing confidence among analysts. Only four downward revisions were recorded, underscoring Wall Street’s bullish sentiment toward the entertainment powerhouse.
Netflix earned $4.21 per share, a whopping 99% year-over-year increase. Meanwhile, revenue is forecast to increase 15% year-over-year to $10.1 billion.
The company shifted its focus from pure subscriber growth to prioritizing operating margins and revenue growth. This pivot includes a robust advertising model, which becomes the cornerstone of its growth strategy.
In terms of content, the blockbuster release of ‘Squid Game Season 2’ and other high-profile projects ensure a steady stream of engagement. Netflix is also venturing into live events, including NFL games and boxing matches, expanding its appeal to a wider audience.
Shares of NFLX closed last Friday at $858.10. At current levels, Netflix has a market capitalization of $366.8 billion. Shares fell 3.7% to start 2025 after posting an 83% annual gain last year.
Source: Investing.com
It’s worth mentioning that Netflix has an excellent InvestingPro Financial Health Score of 3.1/5.0, reflecting its strong financials, strong growth prospects and innovative strategies.
Be sure to check out InvestingPro to stay up to date with the market trend and what it means for your trading. Subscribe now and get 50% discount and position your portfolio one step ahead of everyone else!
On the other hand, Procter & Gamble faces operational challenges and weak growth, which makes it less attractive in the current market environment. The global consumer products company is scheduled to report its fiscal second quarter earnings before the stock market opens at 6:55 a.m. ET on Wednesday.
The expected move in the options market is about 3.4% up or down. The stock fell 1.6% after its latest earnings report in October.
Underscoring several challenges facing Procter & Gamble, 18 of 19 analysts surveyed by InvestingPro cut their sales estimates ahead of press, citing weak consumer demand and a challenging outlook.
Source: InvestingPro
P&G is estimated to have earned $1.86 per share, up just 1.1% from EPS of $1.84 in the year-ago period. Meanwhile, revenue is forecast to grow 2.2% over last year to $21.6 billion. These modest growth projections reflect mounting challenges for the company.
The consumer goods giant has recently faced disruptions, including a ransomware attack on one of its suppliers. An attack could affect distribution efficiency and hurt margins in the short term.
Moreover, increasing competition in key markets and inflationary pressures on raw materials are expected to limit profitability.
As such, CEO Jon Moeller could strike a cautious tone and provide soft guidance that reflects supply chain disruptions and weakening margins.
Shares of PG closed last Friday’s session at $161.13, not far from its lowest level since April 2024. At current valuation, the Cincinnati-based consumer goods company has a market capitalization of $379.5 billion. Shares fell 3.8% at the start of the new year.
Source: Investing.com
Although P&G remains a dominant player in the consumer goods sector with strong brands like Tide and Gillette, its growth is slowing and the stock appears to be fully valued. Trading at a forward price-to-earnings (P/E) ratio of 23.7, the stock may not offer much upside from current levels.
Whether you are a novice investor or an experienced trader, take advantage InvestingPro can unlock a world of investment opportunities while minimizing risks amid a challenging market backdrop.
• ProPicks AI: Stock winners selected by AI with a proven track record.
• InvestingPro fair value: Find out instantly if a stock is undervalued or overvalued.
• Advanced Inventory Browser: Search for the best stocks based on hundreds of selected filters and criteria.
• Best ideas: See what stocks billionaire investors such as Warren Buffett, Michael Burry and George Soros are buying.
Detection: At the time of this writing, I am long the S&P 500 and Nasdaq 100 via the SPDR® S&P 500 ETF ( SPY ) and the Invesco QQQ Trust ETF ( QQQ ). I’m also long the Invesco Top QQQ ETF ( QBIG ), the Invesco S&P 500 Equal Weight ETF ( RSP ), and the VanEck Vectors Semiconductor ETF ( SMH ).
I regularly rebalance my portfolio of individual stocks and ETFs based on an ongoing risk assessment of the macroeconomic environment and corporate finances.
The views expressed in this article are solely the opinion of the author and should not be construed as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more analysis and insight into the stock market.
