Oil and gas prices remain high for consumers, but heading into the fourth quarter, Wall Street analysts are saying buy the stocks.
According to a FactSet analysis published on Friday, out of all the industries tracked by the firm, analysts were most upbeat about the energy sector, which has the highest percentage of “buy” ratings, at 64%. Conversely, that report said, they were most downcast on consumer staples, which had lowest share of buy ratings, at 45%.
Schlumberger
SLB,
and Halliburton Co.
HAL,
both big oil-industry names, were among the most liked S&P 500 companies by analysts, according to the report. For Schlumberger, 94% of its stock ratings were buy ratings, while the percentage of buy ratings for Halliburton stood at 93%. Others in that top 10 list included Delta Air Lines Inc.
DAL,
Amazon.com Inc.
AMZN,
and Nvidia Corp.
NVDA,
Rising oil prices played a big role in pushing up prices last month overall, even as the rate of price increases for things people buy has slowed since last year. Higher prices for basics like oil, along with steeper interest rates, have constrained what people can buy elsewhere — from the stores, hotels, auto makers, restaurants and other businesses that make up the consumer discretionary sector.
The October contract for West Texas Intermediate crude settled above $90 a barrel on Friday, putting it at the highest front-month price since November. Oil prices have risen as Saudi Arabia and Russia pull back on production.
With the third-quarter earnings reporting season just a few weeks away, Wall Street analysts, collectively, expect profit growth for the 500 companies in the S&P 500 Index — albeit just barely. They see per-share profit rising 0.2% during that quarter, according to FactSet. For the fourth quarter, they expect earnings gains of 8.2%, but those estimates generally trend lower as more quarterly results come in.
This week in earnings
Online clothing-selection and styling service Stitch Fix Inc.
SFIX,
reports during the week ahead, amid efforts to cut back. So do auto-parts retailer Autozone Inc.
AZO,
and homebuilder KB Home
KBH,
after rival Lennar Corp. said the market “remained constructive for new homebuilders.” Workplace-furniture maker Steelcase Inc.
SCS,
and Olive Garden parent Darden Restaurants Inc.
DRI,
also report. Five S&P 500 companies overall are set to report earnings during the week ahead, according to FactSet.
The call to put on your calendar
FedEx results, amid shipping-sector drama: Package deliverer FedEx Corp.
FDX,
reports quarterly earnings on Wednesday, as it tries to scale back operations and cut billions in costs amid weaker demand, but the results will also follow drama with some of its rivals. “[FedEx] canceled flights during the quarter due to weak demand,” TD Cowen analyst Helane Becker said in a note on Wednesday. “We believe they benefited from UPS labor issues and possibly from Yellow’s bankruptcy.”
The number to watch
General Mills and food prices: General Mills Inc.
GIS,
— which owns baking mainstays Betty Crocker and Bisquick, as well as pet-food maker Blue Buffalo — reports results on Wednesday. The results will offer grocery-aisle-level insight into consumer behavior, following food-industry price hikes and more concerted bargain hunting among consumers, including among pet-food shoppers.
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