There’s a terrible cliché on Wall Street that it’s not a stock market, but actually a “market of stocks.” In other words, it’s often an oversimplification to paint every investing headline with a broad brush about what it means for every single publicly traded company. Rather, individual risks and opportunities for individual stocks are what investors should study.
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The obvious stocks to watch are the ones in your portfolio. However, looking beyond the movement of indexes like the S&P 500 can also be instructive about unique trends that are emerging in the days and weeks ahead.
As we kick off the week, the following investments are stocks to watch based on earnings, market sentiment, financial sector volatility, politics and more:
| Stocks to watch | Year-to-date returns as of May 5 |
| Apple Inc. (ticker: AAPL) | 33.6% |
| Icahn Enterprises L.P. (IEP) | -24.7% |
| Meta Platforms Inc. (META) | 93.3% |
| PacWest Bancorp (PACW) | -74.9% |
| Walt Disney Co. (DIS) | 15.7% |
Apple Inc. (AAPL)
Last Thursday, Apple announced impressive earnings that showed revenue from its all-important iPhone topped $50 billion on the quarter. It also announced a massive increase to its buyback program, authorizing an additional repurchase of $90 billion of its own stock, and a modest dividend increase on top of that. The icing on the cake was management pointing to “incredible” initial response for its recently launched high-yield savings account plan – a bold foray beyond tech and into finance that could potentially drive game-changing results if it pays off.
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All this makes Apple a stock to watch – both because of its potential to ride this news higher, as well as in indicator of whether investors are broadly willing to bet on future growth even in the face of near-term uncertainty.
It’s also worth noting that even if you don’t own a single stock, you need to watch Apple. By virtue of being a roughly $2.6 trillion company, almost every index fund relies heavily on the performance of this stock. It represents more than 6% of the Dow Jones Industrial Average, more than 7% of the S&P 500, and more than 12% of the Nasdaq-100 all by itself. Even if you’re only in mutual funds in your 401(k), you need to watch Apple.
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Icahn Enterprises L.P. (IEP)
Many are familiar with iconic financier Carl Icahn and his eponymous publicly traded investment firm. He moves are closely watched, because in the past he has made shrewd bets that have paid off big time – and shares of IEP often trade for a premium valuation over similar firms as a result. Lately, however, the pricey valuation of Icahn Enterprises when compared with its underlying assets has been a concern.
Specifically, that valuation has drawn the ire of short sellers over at Hindenburg Research. In a report just a few days ago on May 2, Hindenburg turned the tables on Carl Icahn by arguing his approach involves “using money taken in from new investors to pay out dividends to old investors” and was simply unsustainable. It’s hard to know whether that is a structural problem for the company, but in the meantime IEP is certainly a stock to watch because that note could become a self-fulfilling prophecy if it scares enough of Wall Street off IEP in the days ahead.
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And beyond waiting to see if the stock’s massive move down of 25% or so last week sticks, especially after it finished the week with a big pop on Friday, this is an interesting case study even if you’re not particularly interested in IEP or Carl Icahn. If a single report from an activist group with an obvious agenda can prove powerful enough to rattle a respected company run by a titan of the investing world, it’s further proof that things like “meme stock” mania and sentiment-driven investing may matter more than hard numbers or long-term potential for any company.
Meta Platforms Inc. (META)
While Facebook parent Meta has its fair share of troubles over the last year or two, the last few months have been decidedly smoother sailing for this social media giant. In fact, it’s the best-performing stock out of all the components in the S&P 500.
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That’s not just thanks to changing sentiment or bottom-fishing bargain hunters. When Meta reported its latest earnings numbers on April 26, the business delivered a surprise increase in sales despite a weak ad environment. By way of comparison, rival Snap Inc. (SNAP) posted very ugly numbers recently including a decline in its average revenue per user by 19% that more than offset its growth in new users. The result was a gut-wrenching drop of nearly 50% over the last month or so, including a single day decline of about 20% in the session immediately after those earnings dropped.
On Wall Street, sometimes similar stocks move in lockstep. But clearly not every social media company is equal. Meta is showing it may still have the dominance and staying power that once attracted investors in the first place – but after ugly earnings from its peers like Snap, it will be very interesting to see how this stock moves forward.
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PacWest Bancorp (PACW)
Shares of PacWest, a regional bank once valued at $3 billion just a few months ago, plummeted 50% in a single day on Thursday after it announced it was considering strategic options including a sale – rekindling fears of systemic risk in the financial sector that cropped up earlier this year in the wake of the failure of Silicon Valley Bank.
The regional bank said in a statement that it “will continue to evaluate all options to maximize shareholder value.” And as this article goes to press, PACW is still a going concern. But bank runs are fundamentally sparked by a crisis of confidence more than anything else. So this is a stock to watch as a bellwether of market sentiment for regional banks as a whole. If PacWest goes to zero, as SVB did before it, it may time to start worrying about how many dominoes will fall before this is over.
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Walt Disney Co. (DIS)
Longtime CEO Bob Iger returned to the helm of Disney back in November, replacing hand-picked successor Bob Chapek, who presided over a series of missteps that many investors simply couldn’t stomach anymore. That move was probably understandable, too, considering DIS stock had crashed from a high of around $190 in early 2021 to less than half of that by the time Chapek finally got the axe.
But theoretically, that’s old news. And after Q1 earnings that included an announcement that Disney would be slashing 7,000 positions and reorganizing, investors will be closely watching what other tricks Iger has up his sleeve – and whether financials indicate a company on the upswing, or a stock that still has a ways to go to regain its shareholders’ trust. Disney reports Q2 earnings on May 10.
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And of course, all investors may want to watch Disney as the feud between this giant and Florida Governor Ron DeSantis continues to escalate. For many years, investors have thought of America as the market that is safest from government interference in business activities. But if one man can play politics with a company like this – and a state official at that, not even a federal one – it may inject a new set of risks that Wall Street doesn’t particularly take kindly to.
