When analysts think about the U.S. economy, they are primarily thinking about the U.S. consumer.
Consumers account for more than 70% of gross domestic product (GDP). This is why the U.S. government and analytical firms around the world spend so much time tracking data like retail spending, consumer sentiment and jobs numbers.
If consumers have jobs and are confident in their financial future, chances are good they will be out spending money and boosting the economy.
However, if consumers don’t have jobs (or are underemployed) and are not confident in their financial future, chances are good they will be cutting back on their spending and crimping the economy.
We’re going to take a look at five stocks whose earnings reports can provide insight into a variety of areas of consumer life — housing, energy, technology, health care and retail — and can help paint a picture of our economic future.
Earnings Reports to Watch: Home Depot Inc (NYSE:HD)
Thanks to the Federal Reserve, interest rates have been at incredibly low levels for years. These low levels have stimulated borrowing and have helped to revive the housing sector after the 2008 financial crisis.
As our SlingShot Trader subscribers can tell you, Home Depot Inc (NYSE:HD) has been a good barometer for the sector in general because it captures every facet of the housing market. For example, new home buyers go to HD to outfit their homes, existing home buyers visit Home Depot for paint and carpet and home remodelers go to HD to buy faucets, fixtures and tile.
When the housing market is doing well, HD will be doing well. When the housing market is doing poorly, HD will be doing poorly.
HD is scheduled to release its quarterly earnings numbers on Aug. 16 before the market opens. Seeing how the company performs will provide insight into the health of an important component of the U.S. economy.
Earnings Reports to Watch: JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO)
JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) is part of another of our favorite themes in SlingShot Trader: solar power.
Along with many others in the industry, JASO has been a victim of falling oil prices. While alternative energy sources like solar have been getting cheaper over the years, they are still more expensive than traditional fossil-fuel energy sources. When oil prices are high, the difference between the cost of solar and the cost of oil aren’t as noticeable. But when oil prices fall, like they did during the past two years, the difference becomes prohibitive.
JASO has been trying to combat its products’ cost disadvantage by reducing production costs … but unless oil prices start to see a sustained rebound, these measures may not be enough.
JASO is scheduled to release its quarterly earnings numbers on Aug. 17 before the market opens. Its performance will amount to a hint at where analysts believe energy prices will be during the coming year.
Earnings Reports to Watch: Cisco Systems, Inc. (NASDAQ:CSCO)
As we become an increasingly digital society, companies that help maintain the backbone of the internet become ever more important. Cisco Systems, Inc. (NASDAQ:CSCO), one of our perennial favorites at SlingShot Trader, is just such a company. From its internet switches to its routers, chances are good that you interact with CSCO products every single day.
As the “Internet of Things” continues to expand and as more and more of our media consumption and commerce goes mobile, CSCO’s products should remain in high demand. However, if the U.S. economy begins to contract — and businesses, consumers or both start to pull back on new purchases and infrastructure investments — CSCO will suffer.
CSCO is scheduled to release its quarterly earnings numbers on Aug. 17 after the market closes. Its numbers will provide insight into the health of the technology sector and the underlying U.S. economy.
Earnings Reports to Watch: Agilent Technologies Inc (NYSE:A)
The Affordable Care Act (ACA) — “Obamacare” — may not be popular across broad swaths of the electorate, but there is one thing that cannot be denied: it has spurred growth in the healthcare sector. Quarter after quarter, we have seen that healthcare has consistently boosted consumer spending and GDP growth more than any sector.
Agilent Technologies Inc (NYSE:A) has been a beneficiary of this increased spending. As demand for medical services has increased, demand for medical diagnostic products (like those sold by Agilent) has, too. This is a trend that looks likely to continue so long as the ACA remains in effect.
Agilent is scheduled to release its quarterly earnings numbers on Aug. 17 after the market closes. At SlingShot Trader, we’ll be watching this one for insight into whether U.S. health care spending is continuing to expand.
Earnings Reports to Watch: Wal-Mart Stores, Inc. (NYSE:WMT)
U.S. retail spending numbers recently came in at disappointingly low levels. Core retail sales — which excludes the sales of automobiles — were down 0.3% during the month of July. This is not a good sign for the U.S. economy.
Wal-Mart Stores, Inc. (WMT) is an excellent barometer for the stability of the U.S. consumer; even during difficult economic times, consumers are likely to either keep shopping at WMT for the consumer-staples products — like toothpaste and deodorant — they need, or will start shopping at Walmart because it is less expensive than the other retailers they were previously frequenting.
However, WMT has been struggling to compete against the likes of Amazon.com, Inc. (NASDAQ:AMZN) and other online retailers as more and more shopping has been moving away from brick-and-mortar establishments. Walmart’s recent $3.3 billion acquisition offer for Jet.com highlights the company’s perceived need to bolster its online presence.
WMT is scheduled to release its quarterly earnings numbers on Aug. 18 before the market opens — and, thus, provide crucial insight into the financial health of the U.S. consumer.
InvestorPlace advisors John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news. Get in on the next trade and get 1 free month today by clicking here.
