What to Watch This Week: Buffett and Credit, Autos and Newbies
There's never a dull moment on Wall Street. Let's go over some of the items that will help shape the week that lies ahead.
1. The Oracle of Omaha speaks: The annual Berkshire Hathaway (BRK.A) (BRK.B) shareholder meeting takes place Saturday. The company's hometown of Omaha opens up for a weekend of value-investing insight, subsidiary expositions, and special sale prices on wares for the company's investors.
Every Berkshire Hathaway get-together matters, but this one has a new layer of urgency since Warren Buffett revealed earlier this month that he has prostate cancer. The good news is that the cancer was diagnosed in its early stage, but you can bet that shareholders are concerned about the company's succession strategy.
The 81-year-old Buffett has been the public face of the company for decades, and he's regarded by many to be the greatest investor of our time. Charlie Munger has been at Buffett's side over the years, but he also is no spring chicken.
It's going to be a different scene in Omaha this year.
2. Paper or plastic: Credit and debit cards have turned us into a nation of plastic-swiping shoppers. We've become accustomed to the conveniences of not having to stop by the ATM when wallets are a little light and receiving monthly statements showing spending trends.
You won't find companies happier about this than Visa (V) and MasterCard (MA) -- the country's two largest credit card marketers. Don't confuse them with credit card issuers, the banks that take on the credit risks associated with the plastic. Visa and MasterCard simply market the platforms, assist in processing the transactions, and take a small piece of the action for their services.
Both companies will be reporting this week. Visa and MasterCard step up with their latest quarterly reports Wednesday. Analysts see both companies growing their profitability by 22% to 23% over the past year.
Yes, charging pays off.
3. Organic growth: Whole Foods Market (WFM) also reports quarterly results Wednesday. The leading chain of organic supermarkets has been coasting through several quarters of positive store-level comps. An improving economy is encouraging consumers to pay a premium for organically grown groceries and not flinch at some of the high prices of its prepared meals.
Whole Foods isn't as expensive as the old "Whole Paycheck" joke suggests. Organic produce, cage-free poultry, and other Whole Foods essentials do cost a bit more to crank out than traditional supermarket fare, but it's not as if folks are refinancing their homes at the checkout line to pay their grocery bills.
4. Volt of lightning: Few companies have drawn partisan rhetoric the way General Motors (GM) has. Cynics call it Government Motors for its bailout panhandling a couple of years ago. Believers rally behind GM and the bailout that kept it afloat.
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Automakers have generally benefited from the economic recovery. There's a lot of pent-up demand for new cars and light trucks, and GM is jangling the keys. And while the revolutionary Chevy Volt has had a slow start, it's leading the way for more plug-in electrics that will be introduced by other car manufacturers later this year.
The good news for both camps is that at least GM is profitable now. Wall Street is expecting a quarterly profit of 85 cents a share when the company reports Thursday.
Gallery:
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5. Hazing the freshmen: Several companies that weren't trading publicly a year ago will also be reporting their latest quarterly results this week.
TripAdvisor (TRIP) is the recently spun-off website for travel-related reviews. Yelp (YELP) is the TripAdvisor of foodies, which essentially means that it's an edgy website populated with visitor reviews of area restaurants and other venues. Active Network (ACTV) is the leading online platform for endurance event registrations. If you've participated in a 5K run -- or a more laborious marathon or triathlon -- there's a good chance that Active fueled your online registration.
Wait! There's more.
LinkedIn (LNKD) was one of last year's hottest IPOs. It's the leading social-networking website for career-minded professionals. Skullcandy (SKUL) makes headphones with brash design styles. The company got its roots by marketing its iPod earbuds to extreme sports enthusiasts. Zillow (Z) runs the popular real estate website where visitors can get a rough appraisal of what their homes are worth.
It's been an intriguing run in recent months for debutantes, and that's before we even get to next month's likely Facebook IPO.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Whole Foods Market, Skullcandy, LinkedIn, TripAdvisor, Berkshire Hathaway, MasterCard, and Zillow. Motley Fool newsletter services have recommended buying shares of Berkshire Hathaway, General Motors, The Active Network, Zillow, Visa, LinkedIn, and Whole Foods Market.
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