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WEEK AHEAD: OCTOBER 26

Short Description

Apple and the other big US tech stocks that make up the FAAMG grouping are reporting earnings this week. I explain why the Q3 results of these companies is key to the performance of indices like the S&P 500 and Nasdaq - and I also rundown highlights from the economic calendar. Thanks! Rich

Video Script

Apple & Big Tech Earnings Preview - THE WEEK AHEAD (Oct 26 - 30, 2020)

Hi everyone, I’m previewing the week ahead in markets where big tech is out in force with Q3 earnings including the world’s most valuable company Apple. I’ll discuss what to look out for in tech stocks as well as rundown the economic calendar – which includes US GDP figures and rate decisions in Europe and Japan.

Since we’re talking about Apple stock, let’s just go over what a successful investment it has been. Apple’s initial public offering was on December 12, 1980. The company sold 4.6 million shares at $22 each. If you'd purchased $10,000 of Apple stock on its first day of trading, that investment would be worth about $11.5 million as of this month. That's a 115,000% total return. Not bad aye!?

If that little Apple stock fact got your trading juices flowing, please click the like button - it really helps us spread the word about these videos!

As far as the economic calendar goes, we kick off with German IFO expectations on Monday. Tuesday it’s US durable goods. On Wednesday it’s Australian inflation then later the Bank of Canada is expected to keep rates on hold at 0.25%. Thursday the Bank of Japan will likely leave rates unchanged, it’s the first release of US Q3 GDP and later the ECB will likely keep policy unchanged too. We round off the week with German growth figures and Eurozone September CPI and Q3 GDP.

So all the FAAMG stocks report this week. Now some of you may be thinking Rich has finally lost it but FAAMG is actually a thing I promise you. It’s the Acronym for the top five performing US stocks – Facebook, Apple, Amazon, Microsoft and Google. Now the thing to understand here is that the S&P 500 index is up in 2020 – but it would be down if these stocks were removed. That means if these 5 companies have a good earnings season this week, it helps the indices we trade like US500 and NAS100.

So let’s move through the letters here- keeping in mind that how the stock performs after earnings tends to reflect how the real numbers compare with analyst consensus estimates.

First ‘F’ for Facebook. The stock is up 28% in 2020 and could be the next company to reach a $1 trillion valuation. Analysts expect sales to rise 11.7% from last year to $19.73 billion but for EPS – that’s earnings per share - to drop 11% to $1.89.

Next ‘A’ for Apple. Now as I’m sure you know, Apple just released its first 5G iPhone – the iPhone 12 – but that won’t affect the third quarter. The stock is up 59% this year. For Q3, revenues are expected to rise just 0.2% to $64.16 billion with earnings to decline 6.6% to 71 cents. 

Next ‘A’ for Amazon. The stock is up an eye-watering 74% just this year. Clearly it has benefitted from online shopping and businesses using its cloud storage during the pandemic.  Analysts expect sales of $92.5 billion and EPS of $7.27, which is +71% from last year.

Now ‘M’ for Microsoft. The stock is higher by 35% this year as the work-from-home environment increased demand for its products and services. The company releases the new Xbox in November. EPS is expected a $1.55 while revenue growth is expected to have gained 8.1% to $35.7 billion.

 Finally ‘G’ for Google, now called Alphabet just got sued by the US department of Justice in the biggest antitrust case since the one brought against Microsoft 20 years ago. The stock is up 15% in 2020. Sales are expected at 42.77 billion and EPS at $11.18 in Q3, up 5.6% and 10.5% respectively.

Right thanks everyone, good luck trading and make sure to subscribe to our channel so you don’t miss the next video.
 

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