• Fed meeting in Jackson Hole, Powell speech, retail profits in focus.
• Palo Alto Networks is a buy with optimistic earnings and forecasts in sight.
• Lowe’s is a top seller with weak earnings growth, outlook as expected.
• Looking for more actionable trading ideas? Try InvestingPro for under $8/month.

Stocks on Wall Street closed higher on Friday, capping the best week of 2024 after encouraging U.S. economic data helped ease recession fears.

Source: Investing.com

The benchmark rose 3.9%, its best week since November 2023. The tech-heavy stock gained 5.2%, while the blue chip gained 2.9%.

Next week is also likely to be eventful, as attention will turn to the Fed’s annual economic policy symposium, which will take place in Jackson Hole, Wyoming, starting Thursday.

Investors will be closely watching Fed Chairman Jerome Powell’s speech on Friday for clues about the interest rate outlook. As of Sunday morning, investors expect the Fed to cut rates by 25 basis points at its September meeting, and there is a 25 percent chance of a disproportionate 50 basis point cut.

Source: Investing.com

Elsewhere on the earnings list, only a handful of corporate results remain as the second-quarter earnings season comes to a close, including a slew of retailers such as Target (NYSE:), TJX Companies (NYSE:), Lowe’s (NYSE:) and Macy’s (NYSE:). In the technology sector, Palo Alto Networks (NASDAQ:), Snowflake (NYSE:), Workday (NASDAQ:) and Baidu (NASDAQ:) are all committing to earnings.

Regardless of which way the market goes, below I highlight one stock that is likely to be in demand and another that could see renewed losses. However, keep in mind that my time frame Only for the coming week, Monday, August 19th – Friday, August 23rd.

Stock to buy: Palo Alto Networks

I believe Palo Alto Networks will post significant gains this week as the cybersecurity leader is expected to report another quarter of positive revenue and earnings growth and offer a solid outlook thanks to strong demand for its various cloud-based security services.

The Santa Clara, California-based company is expected to report its fourth-quarter earnings report on Monday after the U.S. market closes at 4:05 p.m. ET.

According to the options market, market participants expect a significant fluctuation in PANW shares after the release, with a possible implied move of approximately 9.6% in either direction.

Source: InvestingPro

Analysts expect the cybersecurity specialist to report earnings of $1.41 per share, down 2% year over year, while revenue is expected to rise 8% to $2.16 billion as cybersecurity threats continue to evolve and companies prioritize digital security.

Palo Alto Networks has continually benefited from rising demand for its cloud-based security offerings amid the increasing number of cyberattacks worldwide, a trend that has led to growing confidence among analysts and investors alike.

According to InvestingPro, Palo Alto Networks’ earnings per share (EPS) estimate has been revised upward 23 times in the past 90 days, indicating strong optimism about the company’s prospects.

But, as is often the case, it’s more about forecasts than results. With that in mind, I expect Palo Alto Networks CEO Nikesh Arora to provide an optimistic outlook for fiscal 2025 as the company continues to benefit from robust growth prospects in cybersecurity.

PANW stock closed Friday’s session at $334.11, about 12% below its record high of $380.84 set on Feb. 9. At current levels, Palo Alto Networks has a market valuation of $108.2 billion. Shares are up 13.3% year-to-date.

Source: Investing.com

It is worth noting that InvestingPro’s AI-powered models rate Palo Alto Networks with a near-perfect Financial Health Score of 4.0 out of 5.0, highlighting its solid profitability and promising growth trajectory.

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Stock to sell: Lowe’s

On the other hand, home improvement retailer Lowe’s presents a less favorable outlook. The company will release its Q2 update before the U.S. stock market opens at 6:00 a.m. ET on Tuesday, and expectations are not promising.

Lowe’s is struggling with weaker consumer demand trends and an uncertain fundamental outlook. The retailer’s profits have declined each of the past four quarters, while sales have declined each of the past five. Consumers are spending less on home improvement projects and are increasingly hesitant to invest in major home improvement projects.

According to the options market, traders are factoring in a fluctuation of about 5% in either direction for LOW stocks after the release.

Source: InvestingPro

Wall Street expects the Mooresville, North Carolina-based company to earn $4.00 per share in the July quarter, a decline of 12.3% from earnings per share of $4.56 in the year-ago period. This is due to higher cost pressures and declining operating margins. Revenue is expected to decline 4.2% year-on-year to $23.96 billion.

InvestingPro reports that 26 of 28 analysts have significantly cut their earnings and revenue estimates for Lowe’s ahead of the earnings release, further underscoring the pessimistic sentiment surrounding the stock.

Looking ahead, I believe Lowe’s executives will provide a disappointing outlook for the current quarter and strike a cautious tone due to several near-term headwinds, including a decline in spending on items such as backyard grills and patio sets.

Unlike its competitor Home Depot (NYSE:), which derives a significant portion of its revenue from professional contractors and builders, Lowe’s relies more heavily on do-it-yourself customers. This dependence has made the company more vulnerable to changes in consumer behavior, especially in the current economic climate.

LOW stock closed at $241.15 on Friday, giving it a market cap of $137.4 billion. Shares have fallen nearly 8% since peaking at $262.49 on March 22.

Source: Investing.com

It is worth noting that InvestingPro paints a negative picture of Lowe’s stock, citing concerns about declining earnings and revenue growth prospects.

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Announcement: At the time of writing, I am long the S&P 500 through the SPDR® S&P 500 ETF and the Invesco QQQ Trust ETF. I am also long the Technology Select Sector SPDR ETF (NYSE:).

I regularly adjust my portfolio of individual stocks and ETFs, continually reassessing both the macroeconomic environment and the financial data of the companies.

The views discussed in this article represent solely the opinion of the author and should not be construed as investment advice.

Follow Jesse Cohen on X/Twitter @JesseCohenInv for further stock market analysis and insights.