One big question facing investors is how well these companies are grappling with the dual threats of supply chain bottlenecks and spiking inflation this holiday season.
Despite those headwinds, New Street Advisors founder Delano Saporu believes in the strength of the U.S. shopper.
“The big thing on the consumer sentiment side, I still think that’s very, very strong,” Saporu told CNBC’s “Trading Nation” on Friday. “Consumers are still flush with cash, consumers are wanting to spend through the holiday season. That is a major strong point now.”
Target is one stock reporting this week that Saporu will be closely watching.
“Target is really in an optimal position right now because they’re trading relatively at a … low valuation,” said Saporu.
He points to an expanding store count and investments in its e-commerce presence as reasons to be bullish.
“Those areas, those initiatives, bode well for people that have been buying the stock to continue buying and/or hold their positions,” Saporu said.
Target is scheduled to report earnings Wednesday. Analysts surveyed by FactSet anticipate $2.82 a share in profit in its October-ended quarter and for sales to climb 8%.
Matt Maley, chief market strategist at Miller Tabak, said Walmart could weather the supply chain and inflation issues well through the holiday stretch.
“A lot of their supplies come domestically so that’s helpful to them. And of course, if people are worried about inflation, that’s just going to draw more people to stores like Walmart whose prices are a little bit cheaper so they could do well,” Maley said during the same interview.
The stock is at a key juncture, though. Maley highlights an “ascending triangle pattern” in the charts where the stock is bumping up against key resistance just above $150 while also making a series of higher lows.
“If they report some good earnings and good guidance based on some of these issues we’re talking about, that’s really going to be one of those breakouts that can really take the stock a lot higher into the end of the year,” he said.
Walmart is scheduled to report earnings Tuesday. Analysts anticipate $1.40 a share in earnings, up from $1.34 a share a year earlier, while sales are expected to tick just slightly higher year over year.
Disclosure: New Street Advisors holds TGT.