5 Things to Watch This Week: Bellwethers on Land, at Sea, Online and at Home
There's never a dull moment on Wall Street, not even when most of us are distracted by imminent arrival of the holidays. Let's go over some of the items that will help shape the week that lies ahead.
1. A chorus of bellwethers: Some weeks find a company or two reporting quarterly results that shed some light on the state of corporate America. This week there will be plenty of reporting companies that bear watching for that very reason.
Pay attention, even if you have no plans to own any of these four companies. They have a lot to say if you're willing to listen.
- Cintas (CTAS), the leading provider of company uniforms, is a perfect example. If companies are hiring -- at least the ones that provide branded uniforms for employees to wear -- it'll show up in Cintas' report. Cintas reports Tuesday, and the bellwethers will keep coming.
- Paychex (PAYX), a leading provider of payroll and human resource outsourcing for small- and medium-sized companies, will give us a good glimpse on the volume of paychecks going out.
- Herman Miller (MLHR) and Steelcase (SCS) make office furniture. Herman Miller is the company that invented the cubicle, but don't hate it for that. Both Herman Miller and Steelcase will arm us with more data on the activity levels of corporate spending.
2. Cruising for a bruising: Folks really do ask "What time is the midnight buffet" on cruise ships. I guess when you set sail on ships with exotic ports of call and unlimited edibles, you can't expect to have all of the passengers thinking straight.
Carnival (CCL) reports on Tuesday. The world's largest cruise ship operator doesn't just own the vessels that bear its name. Carnival's other fleets include Holland America, the Princess Cruise line made famous by The Love Boat, and several European brands.
Bookings have been holding up in recent quarters, but stiff fuel costs have been keeping profits in check. You didn't think these gargantuan boats were propelled by sails, did you?
As you can probably imagine, Carnival operates better in a climate with a healthy economy. Life's easier when a cruise line doesn't have to discount aggressively to fill up its cabins. Other factors that weigh heavy on the industry are weather and political stability. Good luck filling a cruise through the Caribbean during the summer hurricane season, and people are less apt to want to be too far away from home during times of geopolitical uncertainty.
3. Can Zynga bounce back: If Willie Nelson is available, maybe we can get a FarmVille Aid benefit concert off the ground.
Zynga (ZNGA) went public last week, and it wasn't pretty. Even though the stock priced at the high end of its $8.50 to $10 range on Thursday night, the social gaming giant closed out its first day of trading on Friday 50 cents lower at $9.50.
This means retail investors who probably couldn't get in on the IPO to own piece of the company can now buy in cheaper than last week's institutional investors -- but should they? Some will argue that even at its current $7 billion valuation, the company behind FarmVille and Words With Friends is still too expensive.
Zynga's performance over the next few days and weeks will be important. Groupon (GRPN) also eventually fell below its $20 IPO price last month, but the daily deals specialist did bounce back. With other dot-com darlings -- from Yelp to Facebook to possibly even Twitter -- looking to possibly go public in 2012, busted IPOs will be a problem.
4. Multiplex magic: The holidays seem to be made for film exhibitors. With kids out of school, family over, and the weather perhaps a bit too cold to meander outside, studios often like to have a few meaty offerings on the theatrical release calendar.
Some of the big movies opening in the coming days include The Adventures of TinTin, We Bought a Zoo, and the American remake of The Girl With the Dragon Tattoo.
This hasn't been a good year for Hollywood. Ticket sales are down relative to last year. Earlier this month, the week that New Year's Eve came out, the industry had its weakest weekly tally of box office receipts since 2008.
There are plenty of big movies opening during these final two weeks, but it's unlikely that they will be able to make up the ground that has been lost year to date.
5. Home-y for the holidays: Bed Bath & Beyond (BBBY) has been resilient. It could be that there's a natural appetite for the latest single-cup brewers and home-based soda makers in any kind of economic climate. It could be that folks load up on soft goods to spruce up their homes -- instead of undertaking outright home improvement projects -- because homeowners can take those items with them if a foreclosure forces them to roll up the welcome mat.
Bed Bath & Beyond's health should be on display when the company reports Wednesday. Analysts see the superstore chain posting a profit of 88 cents a share, well ahead of the 74 cents a share it posted a year earlier.
It's OK to hold out hope for an even bigger profit number. Bed Bath & Beyond has blown past Wall Street's bottom-line estimates consistently over the past year. If it's going for a sweep, it probably knows where it stocks the brooms.
Longtime Motley Fool contributor Rick Munarriz does not owns shares in any of the stocks in this article. Motley Fool newsletter services have recommended buying shares of Cintas, Paychex, and Bed Bath & Beyond.