Market Insights

Investors face a mixed bag of results as we push through the busiest week of earnings season.

Here are some key takeaways we’ll explore in more detail below:

• Technology giant Apple (AAPL) is evolving past the iPhone.
• Reality catches up with chip stocks.
• Some newer tech names are still breaking out as bigger firms struggle.
• An elite group of consumer stocks may be emerging into the key Thanksgiving-Christmas period.
• Solar stocks are still ripping.

AAPL, the most popular stock at TradeStation for the last four months, comes first. Its quarter was all about life after the iPhone. ‘Wearable’ gadgets like Watch and Beats generated much more revenue than expected. Older products like Mac and iPad also outperformed.

The company’s services business missed on revenue but beat on margins. It shows Tim Cook won’t sacrifice profits to grow, unlike Jeff Bezos at Amazon.com (AMZN). Services matter because they offer opportunities beyond the iPhone and because their revenue is stickier than consumer electronics.

But even then there was some good news for the iPhone, which finally started gaining traction in the key market of China.

Semiconductors Struggle

Chip stocks fell after a strong start to earnings season. Advanced Micro Devices (AMD), for instance, forecast weak revenue as sales of videogame consoles slowed. Now investors are waiting for the big shift to cloud-based gaming in October.

Qualcomm (QCOM), unlike AAPL, had bad news from China. Market-share gains by Huawei in the Chinese smart-phone market has hurt QCOM clients like Xiaomi. That caused QCOM to issue weak guidance. It also makes QCOM a key name to watch in trade disputes between President Trump and Beijing.

Maxim Integrated (MXIM), a smaller chip stock, also fell after revenue missed estimates.

Beyond Meat Chopped Up

Food-innovator Beyond Meat (BYND) also lost more money than feared despite revenue rising more than expected. (Up 287 percent!) That raises questions about the former high-flier’s profitability. Even worse, pre-IPO shareholders unloaded almost $500 million of stock at a big discount.

Grubhub (GRUB) was another upstart to crash. This time, the disruptor got disrupted by Uber Eats and DoorDash.

But then you had McDonald’s (MCD) beating on earnings, beating on revenue and beating on comps. The Dow member’s recipe of renovated stores, digital ordering and price hikes pushed it to yet another all-time high above $200.

Ditto for Yum! Brands (YUM), the parent of Taco Bell, Pizza Hut and KFC. Stocks like MCD and YUM may be old school, but they’re capturing a wave of consumer spending on services. Other winners recently included Starbucks (SBUX) and Chipotle Mexican Grill (CMG).

Consumer Stocks

The consumer trend also lifted companies like Procter & Gamble (PG) and Kellogg (K). Both companies beat estimates by pivoting to strong product lines. For PG, that meant Tide and Swiffer. For K, it meant snacks over cereals.

At least two other consumer-facing companies stood out in the last week of earnings. Crocs (CROX) exploded higher on healthy margins and guidance for a strong end of year. RH (RH) also rallied after apparently finding a niche for its high-end furniture.

Under Armour (UAA) and Deckers Outdoors (DECK), on the other hand, crashed on signs of weakness. UAA had decent growth overseas but warned about sales going forward as competitors like Nike (NKE) threaten in the U.S. market. DECK painted a mediocre picture for its coming fiscal year.

Ralph Lauren (RL) also encountered a wave of sellers as investors were less than thrilled about weak domestic sales.

New Tech Stocks Keep Rising

A handful of up-and-coming technology stocks rallied as new growth stories keep emerging.

Twitter (TWTR) led the charge, ripping 13 percent in the last week, after beating on almost every metric: earnings, revenue and daily users. It was almost like a replay of Snap (SNAP) in our previous recap as smaller social-media stocks take ad dollars and enthusiasm from Facebook (FB).

Shopify (SHOP) was another huge winner — again. The provider of online shopping carts for small businesses reported another monster quarter and spiked to yet another record high. It’s up more than 150 percent this year.

Akamai Technologies (AKAM) hit its highest level since August 2000. The company, which got big by caching web pages, has reinvented itself as a provider of cyber-security services.

Garmin (GRMN) was another blast from the past, and a blast to the upside. Earnings, revenue, margins and guidance all beat consensus. Once left for dead by investors, the pioneer of GPS systems has reinvented itself as a leader in fitness, aviation and women’s health.

Healthcare Still Sickly

Health care stocks, on the other hand, didn’t feel so great. Drug giants Merck (MRK) and Pfizer (PFE) both failed to rally despite strong earnings. MRK simply drifted despite key products like Keytruda and Gardasil performing well. PFE dropped as a big divestiture caused analysts to cut their valuations of the firm’s overall business.

Meanwhile, in the background, President Trump made noises about importing cheaper drugs from overseas.

Hospital chain HCA (HCA) also got clobbered after missing its numbers.

There are two other items you need to know about.

First, Mattel (MAT) is the S&P 500’s biggest gainer in the last week after beating estimates. Gains from the “Toy Story” movie, a rebound in Barbie drove and cost cuts drove the rally. The news was very similar to rival Hasbro (HAS) last week.

Second, solar energy kept shining and remains 2019’s best-performing industry. This week’s winners were Enphase Energy (ENPH) and SunPower (SPWR). Keep an eye on Congress for news about a key tax credit getting renewed.

In conclusion, it’s been a very busy week of earnings. There were winners and losers. Hopefully post helps you know what’s going on.