After yet another choppy week for U.S. equity markets that brought new record highs for the DJIA and the S&P 500, investors can look forward to key economic reports on inflation, retail sales for April, and to the tail end of earnings season. Nearly 800 companies will report results next week including Disney (DIS), Airbnb (ABNB) and Tyson Foods (TSN) among others.
We’ll also get main reports on U.S. core inflation next week, as well as April retail sales and a preliminary reading on consumer confidence for May. We all know that inflation is omnipresent, but it has yet to show up in any substantive way in government reports. Consumers are aware of it, but it is not deterring them from spending. As economies recover, retail sales and consumer sentiment will likely continue to rise.
With the markets looking towards an uptrend, many investors are looking for new ways to put their money to work. Our team has some recommendations for potential candidates to watch this week.
Investors anticipate a global boom in oil demand as is evident by the performance of The Energy Select Sector SPDR Fund (XLE) has more than doubled the S&P 500’s gains so far in 2021. This bodes well for Core Laboratories (CLB), a firm that provides enhanced oil recovery techniques.
Core Laboratories (CLB)
The company recently reported first-quarter 2021 results wherein adjusted earnings of 15 cents a share beat analyst estimates. This outperformance could be attributed to a decline in year-over-year operating expenses, which came in at $96.8 million, down from $261.4 million a year ago. Nevertheless, the bottom line also declined from the year-ago quarter’s earnings of 31 cents per share, possibly due to a drop in the year-over-year revenues of both reservoir description and production-enhancement segments.
The company did provide an optimistic look ahead. As the economy recovers from the covid induced disruption Core Labs sees an improving outlook for the current year’s U.S. land activity and international growth opportunities, which should improve revenues during the second quarter of 2021. Additionally, rising activity levels are projected to yield higher margins in the second half of the year.
Riot Blockchain Inc (RIOT)
Riot Blockchain Inc (RIOT) has already announced that for Q1 2021, 491 Bitcoin were mined as compared to 303 Bitcoin mined in Q4 2020, and to 222 Bitcoin mined in Q3 2020. The company’s hashing capacity has increased by 460% on a year-over-year basis. This is likely to translate into sustained growth in the number of Bitcoin mined on a quarter-over-quarter basis. The company therefore seems positioned for accelerated top-line and cash-flow growth.
In April 2021, Riot Blockchain acquired Whinstone, which has the largest Bitcoin hosting facility in the U.S.. With a strong cash buffer, the company is positioned for sustained organic and inorganic growth. This will likely translate into sustained growth in the number of Bitcoin mined on a quarter-over-quarter basis which means accelerated top-line and cash-flow growth.
After surging to a high of $79.50, the stock currently trades around $33. The stock looks poised for a renewed surge from current levels.
Upwork Inc. (UPWK)
Upwork Inc. (UPWK) is a key player in the burgeoning gig economy. The company’s online platform connects businesses with freelancers in 180 countries.
Looking at last week’s chart, you may wonder why Upwork share price slid after the company reported better than expected Q1 numbers. The company reported earnings of $0.03 per share on revenue of $113.6 million topping estimates of a $0.04 per share loss on revenue of $108.9 million. However, substantial increases in spending on research and development, sales and marketing, and general costs left the company working at an operating loss. This sent the share price lower, dropping as much as 12% intraday.
It’s worth noting though, that despite the loss, net losses actually decreased by around a third compared to the same period last year, dropping to $0.06 per share. Other than the operating loss, numbers were positive. Revenue increased by 37% year over year, with gross sales volume increasing by 41%. Sales gross profit margins increased by a full percentage point to 73%.
Even though sales have increased significantly, the business is still not profitable. This alludes to the fact that the gig economy is still in its infancy, and Upwork has chosen to concentrate on growth rather than profit.
In addition to the first-quarter earnings beat, Upwork also forecasted a second-quarter earnings beat, with revenue ranging from $119 million to $121 million, compared to the $114 million analyst forecast. And for the entire fiscal year 2021, Upwork predicts revenue of $480 million to $490 million, well ahead of the analyst estimate of $467 million. Assuming revenues grow in accordance with the forecast, investors are likely to see an appreciation in the share price this year.
Given its dominant position in the market, the company stands to gain the most from the gig-economy trend. The winds of the gig economy are blowing in the company’s favor and explosive returns are anticipated.
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