5 Stocks to Watch this Week 9/8

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Wednesday, September 9

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Thursday, September 10

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Friday, September 11

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Palo Alto Networks (PANW)

The last cybersecurity stock to report for the second quarter season has an Estimize EPS Consensus of $0.26, one cent higher than both Wall Street and corporate guidance. The Estimize community is also looking for higher revenues of $258.12M compared to the Street’s estimate of $255.78M and guidance of $254.00M.

What to watch for: Palo Alto Network has been able to take advantage of the cybersecurity explosion as the frequency of cyber attacks in recent months have created serious concern in many large corporate and government entities. The company has seen an increase in both new subscriptions and renewals of existing contracts. The company has also been expanding and diversifying its product portfolio to cover a large spectrum of different needs, essentially evolving into a one-stop-shop for all cybersecurity services and platforms. Palo Alto’s strategy includes targeting larger corporations, recently releasing its new PA-7080 firewall that caters to large scale companies and governments. These initiatives geared towards increasing scale and power should allow the company to outpace industry growth and outperform competitors. However, PANW stocks dropped with the rest of NASDAQ and tech stocks following the uncertainty with the Chinese macro situation. Whether or not the stock can gain significant upward momentum following its fiscal Q4 results on Wednesday is yet to be seen.

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Barnes and Nobles (BKS)

The Estimize EPS Consensus on BKS is in line with Wall Street’s estimate of $0.12. The Estimize Consensus predicts slightly lower revenues of $986.53M compared to the Street’s estimate of $986.60M.

What to watch for: Barnes and Nobles is in an industry that is undergoing significant change. Not only has the demand for paper books and goods gone down significantly, the bookstore industry is transforming traditional store-based companies into multi-channel players. After a lackluster fiscal 2015, the company recently spun off its college segment into Barnes & Noble Education (OTCQB:BNET) to allow for more focus within its operations. Nook, Barnes and Noble’s low performing e-commerce and digital reading initiative is paired with the education segment as well. With the spin-off of this weak segment, the company will begin paying a quarterly dividend of $0.15, an action the company was forced to stop when the Nook division saw deep losses. Fortunately, strong new book releases such as Harry Potter and Fifty Shades of Grey have driven a lot of Barnes and Nobles’ earnings over the years. With Harper Lee’s new book, Go Set a Watchman setting a record for first-day sales, it is possible that this best-selling title could boost Barnes and Nobles’ performance.

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Krispy Kreme Doughnuts (KKD)

The Estimize Consensus calls for EPS of $0.17 compared to the Wall Street consensus of $0.18. The Estimize Consensus predicts revenues of $129.63M compared to the Street’s estimate of $131.08M.

What to watch for: Krispy Kreme, the international doughnut maker who experienced serious financial trouble in 2004 seems to be focusing on expansion strategies that will allow for the company to increase its profits. The company has been increasing its store count over the years, growing its systemwide store count by 19.2% in 2015, and plans to develop more than 700 shops in nontraditional areas and urban markets. KKD is also looking to expand its international footprint, boasting plans of entering six new countries this year. However, sales growth hasn’t been able to translate to greater profits as a result of intense pressure and declining margins. As a result, shares remain depressed and the company has started repurchasing stock in an effort to increase its earnings and share prices.

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Lululemon (LULU)

The Estimize EPS Consensus is currently calls for $0.34, in-line with Wall Street, but two pennies higher than corporate guidance. The Estimize Consensus predicts revenues of $442.56M, lower than both the company guidance at $442.50M and the Wall Street consensus at $445.50M.

What to watch for: Lululemon has seen poor earnings results and major PR disasters over the past few years, however, recent optimism surrounding the turnaround of the company seems to be gaining a lot of traction. The athletic apparel retailer has increasingly focused on its fast-growing men’s and children’s segments and recently introduced fashion wear into its stores, a deviation from its normal activewear lines. Not only so, but news of the company’s intention to expand internationally and speculation that Lululemon products could be added to large department stores such as Macy’s have also driven investor confidence. Aside from the company’s potential, investors also note that with $655M in cash and no debt on its balance sheet, LULU is well-positioned to face the difficult market environment and can easily take on leverage if necessary for growth. However, the company is by no means cheap, at $65 a share and with a forward P/E of 35 it’s richer than competitor Nike, but well below the 103 valuation for Under Armour.

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Kroger Co (KR)

The Estimize Consensus calls for EPS of $0.40, in-line with the Wall Street consensus. The Estimize Consensus predicts revenues of $25.76B compared to Wall Steet estimates of $25.58B.

What to watch for: Kroger has been intently focused on expanding their natural and organic food business and as a result has been able to steal market share from upscale grocers. The mainstream grocery chain provides value offerings to customers that are no longer willing to spend their whole paycheck at Whole Foods. The company has shown strong fundamentals, with earnings per share (EPS) growth in the double digits for the past five quarters, and double-digit sales growth in four of the past five quarters. Kroger faces some stiff competition from other retailers enforcing the same strategy such as Wal-Mart, Target and Sprouts.

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(Photo Credit: Scott Ableman)

Source: 5 Stocks to Watch this Week 9/8

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