Wednesday, October 21, 2020

Four Stocks To Watch For Tuesday Trading Session

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U.S. stocks continued their slide yesterday with all three major indices closing in the red. The Dow was the biggest loser with a 1.8% decline, while the Nasdaq fared the best with only a 0.1% decline. The S&P 500 tumbled 1.1% and the small-cap Russell 2K sold off for a whopping 3.3%.

Early morning futures action is pointing to the possibility of a tepid rebound today. S&P 500 futures are up slighty, and Nasdaq contracts are posting stronger gains.

Asia posted declines overnight with the exception of Japan’s Nikkei 225, which posted modest 0.2% gains. However, China’s Shanghai Composite fell 1.2% and Hong Kong’s Hang Seng lost nearly 1.0%. In Europe, stocks are in the green after yesterday’s sell off. The German DAX is leading the way with a 1.1% gain and the Eurozone Stoxx 600 is up 0.7%.

Fed Chairman Jerome Powell is scheduled to testify in front of Congress about the CARES Act, and many experts expect he will stress the need for more stimulus measures. His comments could create some volatility during the trading session.

Today, we’ll hear pre-bell earnings reports from Autozone [AZO]. Later, Nike [NKE], Aurora Cannabis [ACB], and Stichfix [SFIX] will report after the session closes.

Here’s what’s moving the market this morning.

Autozone (AZO)

Autozone is rallying today after the company crushed analyst estimates on its fiscal Q4 earnings report. The firm reported earnings of $30.93 per share against Wall Street estimates of only $25.00 per share. Revenues of $4.55 billion also surpassed expectations of $4.153 billion.

According to Autozone’s sales numbers, the company closed the quarter strong. Comp store sales rose 16.5% in the last four weeks of the firm’s fiscal Q4, and the sales spike came after the CARES Act expanded unemployment benefits expired. All and all, comp store sales rose 21.8% in the quarter.

It seems like nothing can stop Autozone. This company is very well-managed and seems to consistently post strong earnings despite whatever insanity is gripping the market. People need to fix their cars, and they’re more likely to do it themselves when money is tight.

Shares of AZO are up 4.5% in the pre-market on the bullish earnings report.

Gamestop (GME)

Gamestop has been heating up over the past few weeks, but the hype is really hitting its stride today. A recent Bloomberg report reveals major Gamestop shareholder, investor and entrepreneur Ryan Cohen, wants the company to go after Amazon [AMZN]. According to the report, Cohen’s firm, RC Ventures, wants to take a more active role in Gamestop in order to “produce the best results for all shareholders.”

Sources say the plan calls for Gamestop to go head-to-head with Amazon and other eCommerce vendors by offering a wider selection of merchandise with fast shipping. Mr. Cohen has some experience in this area. He founded Chewy.com [CHWY] and served as its chief executive before selling the startup to PetSmart Inc. in 2017.

Cohen is Gamestop’s largest shareholder with a 10% stake in the company, and the market seems to agree with his plans for a potential strategy shift. GME is one of this morning’s most active stocks and it’s up 22.4% in the after-hours trading session.

DAVIDsTEA (DTEA)

DAVIDsTEA fiscal Q2 earnings report surpassed expectations and shares are on the rise in the pre-market. The firm posted a loss for the quarter, but it was significantly thinner than last year’s totals. Q2’s adjusted loss of $0.06 per share was significantly lower than last year’s Q2 total of $0.24 per share.

However, sales were down significantly from last, possibly due to prolonged impacts from the pandemic. DAVIDsTEA only earned $23 million in the year ending July 31 after earning $39.2 million in the previous year.

This specialty tea retailer’s revenue declines are somewhat concerning, but it managed to substantially narrow its losses despite the sales slump. Either way, traders are bullish. DTEA is trading actively and it’s currently up 42.4% in the pre-market.

AIM ImmunoTech (AIM)

Results from AIM ImmunoTech’s multi-year early access program showed a positive survival benefit in pancreatic cancer patients who took Ampligen after receiving systemic chemo. The study found patients who took the drug posted survival rates roughly twice as high as the control group.

AIM is working with Amarex Clinical Research LLC to seek a fast-track or breakthrough designation from the US Food and Drug Administration. The firm is also seeking an investigational new drug authorization to conduct a followup Phase 2/3 trial on pancreatic cancer patients in the Netherlands.

Pancreatic cancer is one of the toughest types of cancer to beat, so the results of AIM’s drug studies are notable to say the least. With a twofold increase in survival rate, saying this drug has the potential to save lives is no exaggeration. There could be huge demand for Ampligen if the drug clears trials.

The market seems to realize how much commercial and therapeutic potential AIM’s experimental cancer treatment has. AIM is this morning’s most actively traded stock and it’s currently up 31.3% from yesterday’s close.

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