3 earnings season stories that investors should recognize: Morning Brief

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Monday, October 31, 2022

Today's newsletter is by Brian Sozzi, an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Read this and more market news on the go with Yahoo Finance App.

I realize that market watchers have become even more obsessed with imminent Fed decisions and what officials say in various interviews (such as on Yahoo Finance), but there is more going on in business and finance than the central bank.

And if we're learning anything this earnings season, it's that it's surprisingly a good time to be a stockpicker as the market clearly defines winning companies versus losing companies.

To that end, here are a few stories that have recently caught my attention.

Look at GameStop go: Remember when $GME was over $347 a share at the height of the meme stock craze in late January 2021 (note: the stock split 4-1 in July 2022)? Yeah, well, it's a $28 stock today as the company has continued to operationally struggle and Ryan Cohen enjoys sending bizarre tweets out of his Florida compound.

Readers of the Morning Brief know where I stand on $GME, but that is neither here nor there — $GME stock has quietly risen 11% in the past month. S3 Partners CEO Bob Sloan, the Wall Street veteran who just in the new Netflix doc on the meme stock craze, made a good point on $GME on Yahoo Finance Live: "If you look at $GME, I think there's still a billion two short in the stock. If this stock goes past $30, you could see something parabolic."

Bob's comments went viral on Reddit and saw heavy interest on the Yahoo Finance Twitter feed — perhaps teasing another push higher in the stock for whatever the reasons. After all, it's almost the holiday season (video game sales pick up) and the company still has its hardcore fanbase.

McDonald's is back in a big way: The Golden Arches put up a third quarter that checked a lot of boxes for Wall Street bulls: 1) Tasty U.S. same-store sales increase of 6% on higher traffic; 2) U.S. same-store sales above consensus increase of 4%; 3) Solid earnings call by management. Yahoo Finance's Brooke DiPalma reports that consumers aren't even balking at higher prices for Big Macs and fries.

Clearly, the company has tapped into something with the return of Halloween Happy Meal pails, adult Happy Meal toys, and the beloved McRib. That momentum could carry McDonald's into year end, argues long-time restaurant analyst David Palmer at Evercore ISI: "While declining consumer sentiment in the U.S. and Europe is a concern, McDonald’s has shown its historical resiliency in recessions. We believe McDonalds is firing on full cylinders including 1) more impactful marketing and promotions (e.g. Adult Happy Meals and McRib Farewell Tour), 2) strong digital and loyalty engagement; and 3) renovated store assets and premium food options."

Workers repair the logo on a McDonald's sign in Manila, Philippines, on October 6, 2015. Picture taken October 6, 2015. REUTERS/Erik De Castro (Erik de Castro / reuters)

Economic slowdown hasn't hurt Bud Light sales: I spent some time talking with AB-InBev CEO Michel Doukeris following a third quarter report that I think surprised a lot of folks positively. Total sales were up 12.1% and total volumes gained 3.7%. The company saw strength in higher priced Corona and in its "Beyond Beer" segment, which consists of higher priced non-beers such as hard seltzers. Doukeris tells me he isn't seeing inflation-crushed consumers trade down in their beers — actually the opposite. The company could also see a big sales boost from the World Cup, which kicks off in late November. It may be worth it this week to crack open a cold one and run your own analysis on AB-InBev.

What to Watch Today

Economy

9:45 a.m. ET: MNI Chicago PMI, October (47.0 expected, 45.7 during prior month)
10:30 a.m. ET: Dallas Fed Manufacturing Activity, October (-18.5 expected, -17.2 during prior month)

Earnings

Aflac (AFL), Williams Companies (WMB), ON Semiconductor (ON), Loews Corporation (L), Marriott Vacations Worldwide (VAC), Vornado Realty Trust (VNO), PriceSmart (PMT)