The first full week of 2025 promises significant market activity as investors gauge the Federal Reserve’s interest rate trajectory. Key economic indicators and corporate earnings reports will shape market sentiment.
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Source: Investing.com
The week commences with U.S. markets closed on Thursday in observance of former President Jimmy Carter. Friday’s December employment report, projecting 154,000 new jobs and a steady 4.2% unemployment rate, will be crucial. Concurrent release of the Federal Reserve’s December FOMC meeting minutes will further illuminate the likelihood of a January rate cut, currently estimated at 11% by Investing.com’s Fed Monitor Tool.
Source: Investing.com
Earnings reports from Delta Air Lines (NYSE:DAL), Walgreens Boots Alliance (NASDAQ:WBA), KB Home (NYSE:KBH), and Constellation Brands (NYSE:STZ) are also anticipated. Simultaneously, the Consumer Electronics Show (CES) in Las Vegas will spotlight Nvidia (NASDAQ:NVDA) CEO Jensen Huang’s keynote address, focusing on advancements in artificial intelligence and related technologies.
Considering these factors, let’s analyze one potential buy and one potential sell for the week of January 6-10, 2025.
Advanced Micro Devices: A Bullish Outlook
Advanced Micro Devices (NASDAQ:AMD) presents a compelling buy opportunity, fueled by anticipation surrounding its showcase at CES 2025. The company’s press event on Monday is expected to unveil its next-generation RDNA 4 graphics cards, potentially catalyzing a stock surge.
Source: Investing.com
Historically, AMD stock has demonstrated positive momentum during product launch weeks, often accompanied by analyst upgrades. Beyond GPUs, AMD is expected to introduce new products targeting PC, AI, and automotive sectors.
Source: InvestingPro
InvestingPro data underscores AMD’s undervaluation and reinforces a strong buy rating. The company’s robust profitability outlook and projected sales growth, driven by next-gen AI products, further strengthen its investment appeal.
Constellation Brands: Facing Potential Downside
Conversely, Constellation Brands approaches its fiscal Q3 earnings report with a more challenging outlook. Despite the strength of its beer brands, Corona and Modelo, the wine and spirits segments face headwinds from shifting consumer preferences and macroeconomic pressures.
Source: InvestingPro
Analysts have tempered earnings and revenue expectations, anticipating minimal growth. The company’s Q3 earnings, scheduled for release on Friday, are projected to show a modest 2.4% EPS increase to $3.32 and a 2.8% revenue increase to $2.54 billion.
Source: Investing.com
The lack of immediate catalysts, coupled with a cautious outlook, suggests potential underperformance for Constellation Brands. Options markets are pricing in a 4.2% post-earnings move, indicating potential downside volatility. The company’s below-average InvestingPro Financial Health Score of 2.3 out of 5.0 further emphasizes the risks associated with this investment.
Conclusion
This week’s market landscape presents contrasting opportunities. AMD’s strategic positioning in growth sectors and anticipated product launches create a compelling case for investment. Conversely, Constellation Brands faces challenges in its non-beer segments, potentially leading to underperformance. Investors should carefully consider these factors when making investment decisions.
