Money & Markets Week Ahead for the week of November 8, 2020: Cannabis earnings are on investors’ radars.
It’s a big week for cannabis companies.
Plus, the voting portion 2020 presidential election is over. So now what? It could be weeks before we have an official winner.
Here are some things investors should watch on Wall Street this week:
No Election, Now What?
Well, it was a rough week as Americans went to the polls to pick the next President of the United States.
Of course, that wasn’t the only thing people voted on.
But now the attention for investors turns to what’s next.
In a recent episode of The Bull & The Bear podcast, I talked about the history of the stock market related to big national elections.
And the results were telling.
In the two years following a Republican winning the White House, the market goes up on an average of 8.3%. That’s compared to a 5.8% gain if a Democrat wins the White House.
There’s a common misnomer that the markets fare better when a Republican wins the White House compared to a Democrat.
In the short term, there is some validity to that.
However, over the course of a four-year term, the numbers even out a bit.
The markets gain an average of 8.8% over a four-year Democrat term compared to 8.6% over a four-year Republican term.
If we factor in Congressional elections, it’s the same story.
The only thing that throws a wrench in things is uncertainty. The market hates uncertainty.
In the hotly contested presidential election of 2000, the S&P 500 fluctuated more than 11% from its high to its low from Election Day to when the election was finally decided in December.
Fast-forward to today, where the market seems to be taking off in a big way.
It goes to show that the election doesn’t play a huge role in market moves.
On the IPO Front
There are no initial public offerings (IPO) scheduled for this week.
Cannabis Earnings on the Horizon
It’s another full week of earnings for investors.
However, there aren’t a ton of well-known companies reporting this week — except on the cannabis earnings front..
There are three big names in the cannabis field that will be reporting quarterly earnings on Monday:
- Canopy Growth Corp. (NYSE: CGC).
- Tilray Inc. (NYSE: TLRY).
- Aurora Cannabis Inc. (NYSE: ACB).
Expectations for all three companies are for negative earnings per share.
Analysts are projecting earnings per share of minus-$0.28 for Canopy Growth Corp. on revenue of $89.69 million.
This would be a big reduction in revenue for the largest cannabis player by market cap.
In the last quarter, Canopy reported $119 million in revenue and an earnings per share loss of minus-$0.30.
For Tilray, the expectation is for earnings per share of minus-$0.24 on revenue of $54.67 million.
If those numbers hold, it would mark a quarterly improvement for the company.
In the last quarter, Tilray reported a 10% increase in revenue to $50.4 million and a net loss of minus-$0.66 per share.
However, the company has made some strides to cut its expenses, and the second-quarter numbers were adversely impacted by an $18.6 million inventory valuation adjustment.
Aurora Cannabis is projected to report earnings per share of minus-$0.40 on forecasted revenue of $64 million.
The company did report a 5% revenue drop to $72.1 million in the last quarter, so if Aurora can see revenue of $65 million, that would be a solid loss.
It would also be a drop from the $67.5 million the company reported in the same quarter a year ago.
Another big cannabis player — GrowGeneration Corp. (Nasdaq: GRWG), will report earnings on Wednesday.
Analysts are expecting GrowGeneration to report earnings per share of $0.07 on forecasted revenue of $47.38 million.
The company reported record quarterly revenues of $43.5 million in the last quarter, prompting GrowGeneration to raise its 2020 guidance to between $170 million to $175 million.
If the numbers hold, this could turn out to be a very good year for GrowGeneration.
Remember, you can check out my most recent addition to our Cannabis Watchlist at moneyandmarkets.com.
And don’t forget to go to our YouTube channel and watch our weekly Marijuana Market Update.
Money & Markets Week Ahead: Data Dump
It’s another full week of data for investors to go over.
The National Federation of Independent Business (NFIB) will release its Small Business Optimism Index for the month of October.
In September, the optimism index jumped 3.8 points to 104 — a historically high reading, according to NFIB.
The index has 10 components:
- Plans to increase employment.
- Plans to make capital outlays.
- Plans to increase inventories.
- Expect the economy to improve.
- Expect real sales higher.
- Current inventories.
- Current job openings.
- Expected credit conditions.
- Now is a good time to expand.
- Earnings trends.
In all but one of these components — expected credit conditions — small business owners expressed solid optimism.
Despite that, NFIB Chief Economist Bill Dunkelberg said small businesses were still struggling to operate at full capacity and had uncertainty about the future.
The real estate market will be able to digest the Mortgage Bankers Association week-over-week mortgage application report, on Wednesday.
For the week ending Oct. 30, 2020, mortgage applications increased 3.8% over the previous week.
Analysts attributed the increase to continued low interest rates — at 3.01% for 30-year fixed loans.
The data dump continues on Thursday when the Labor Department releases its initial and continuing jobless claims.
Last week, claims were around 640,000. This was better than projected, but job growth is still well below pre-COVID-19 levels.
Earnings Reports
To finish off the Money & Markets Week Ahead, here’s a look at some of the key earnings reports due out next week:
Monday
McDonald’s Corp. (NYSE: MCD)
RingCentral Inc. (NYSE: RNG)
Nikola Corp. (Nasdaq: NKLA)
Canopy Growth Corp. (NYSE: CGC)
Tilray Inc. (NYSE: TLRY)
Aurora Cannabis Inc. (NYSE: ACB)
Tuesday
Advance Auto Parts Inc. (NYSE: AAP)
Jumia Technologies AG (NYSE: JMIA)
Wednesday
GrowGeneration Corp. (Nasdaq: GRWG)
NV5 Global Inc. (Nasdaq: NVEE)
Neptune Wellness Solutions Inc. (Nasdaq: NEPT)
Thursday
Walt Disney Inc. (NYSE: DIS)
Cisco Systems Inc. (Nasdaq: CSCO)
Tower Semiconductor Ltd. (Nasdaq: TSEM)
Digi International Inc. (Nasdaq: DGII)
Friday
Abercrombie & Fitch Co. (NYSE: ANF)
DraftKings Inc. (Nasdaq: DKNG)
That’s all for this week.
Until next time…
Safe trading,
Matt Clark
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.
