Three Stocks to Watch for the Week of April 19th, 2021

Not only did treasuries and equities look past any near-term inflation concerns this week; they rallied on it.  Stocks pushed further into record territory last week, as both the Dow Jones Industrial Average and the S&P 500 gained over 1%.  Both indexes stand roughly 11% higher in 2021 after surging last year.  

Earnings season continues with some of Wall Street’s favorites, like Netfilx (NFLX), Chipotle (CMG) and Southwest Airlines (LUV) all reporting this week.  Some analysts have expressed concern over lofty expectations this season, pointing out the possibility for a pullback as more companies report.  

With current market conditions in mind, our team has a few timely recommendations for you.  Read on to find out which stocks our team recommends to watch next week.

Eaton (ETN) doesn’t generate power, and it’s not a pure play on green energy.  But, as a major supplier of electrical components and systems, it is absolutely an indirect play on this fast-growing industry, and one that is likely to thrive irrespective of the inevitable booms and busts we’ll see in the coming years.  The wind and solar farms popping up around the country need to be incorporated into the national grid, and that’s precisely what Eaton does.

Eaton is a power management company with a 109-year history.  It has been listed on the NYSE for 97 years and has paid a dividend every year since 1923.  That’s remarkable consistency in an industry that has gone through incredible changes over the past century, and that’s a major selling point of this stock.

Many of the high-flying stocks in alternative energy might or might not be around a decade from now.  This is still very much the wild west.  But Eaton almost certainly will be, supplying the survivors with power systems and software and integrating them into the grid.

ETN currently sports a 2.15% dividend yield.  There are 17 Buy ratings for the stock, 6 Hold ratings and one Sell rating.  The company is scheduled to report earnings on Thursday, April 29th.  

NETGEAR Inc. (NTGR) designs, develops and markets networking and Internet connected products for consumers, businesses and service providers.  It operates in two segments — Connected Home, and Small and Medium Business.   NTGR’s product line consists of devices that include network attached storage, wireless controllers and access points, unified storage products, Internet protocol (IP) security cameras, and home automation devices and services.  It also offers value-added services that include  technical support, parental controls, and cybersecurity protection.

NETGEAR is expected to benefit from robust networking solutions.  It maintains a competitive edge with product launches, based on Wi-Fi 6 standards, and aims to leverage the latest technological innovation to accelerate growth.

In order to capitalize on the increasing demand for cloud-based applications pertaining to small and medium-sized enterprises, NETGEAR is introducing next-generation commercial products.

The new offerings include Power over Ethernet (PoE) switches, Multi-gigabit Ethernet switches, high capacity local and remote unified storage, small-to-medium capacity campus wireless local area network (LAN) and security appliances. These products are likely to augment the effectiveness and efficiency of its hybrid cloud access network and reinforce its position in the market.

The company’s net revenue has increased 45.1% year-over-year to $367.07 million for the fourth quarter ended December 31, 2020.

Analysts expect NTGR’s EPS for the next quarter, ending June 30, 2021, to be $0.74, up 37% year-over-year.  It’s earnings surprise history looks impressive; the company has surpassed the consensus EPS estimate in each of the trailing four quarters.  Also, for the next quarter, analysts expect NTGR’s revenue to be $325.62 million, representing a 38.4% rise from the prior-year period.  The company is scheduled to report earnings this Wednesday, April 21st, after market close. 

The last of our stocks to watch this week are shares of C3.AI.  One of 2020’s most talked about IPO’s, AI stock has more quietly of late, turning into one of the market’s more challenged investments.

Shares of the market’s only pure-play on artificial intelligence have tumbled roughly 60% from their February high while striking fresh all-time-lows last week.  The upside?  AI has become a more intelligent stock to buy as Wall Street dances, for the time being, with other companies striking its fancy.

Being cheap of course doesn’t necessarily spell value.  But InvestorPlace’s Luke Lango sees AI as one of the market’s “most compelling growth companies in the world today.”  Luke is all about locating hypergrowth opportunities and with AI he’s estimating there’s a five-fold upside potential in this stock to buy.

Technically and as part of AI’s out-of-favor journey, shares recently failed to hold a hammer pattern, which set up a bullish lower-low, double-bottom.  Instead, the formation gave way to a confirmed bearish flag.  That brings us to today’s less-than-pleasant looking price chart.  And optimistically, much like last year, that has us reflecting on another case of mistaken identity by Wall Street and a stock to buy for the long-haul.

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