After saying goodbye to August—a month which proved to be one of the most volatile for investors so far this year—September is unlikely to bring some calm, unless both the U.S. and China move decisively to resolve their trade dispute.
Markets enter September hoping the U.S. Federal Reserve will come to the rescue, once again cutting interest rates at its mid-month meeting. The S&P 500 fell about 2% in August, pressured by rising recession worries and on-again, off-again hopes of a trade resolution, which moved the market in both directions.
With these macro headwinds in mind, here are three stocks investors should keep an eye on this coming week, especially as some top U.S. companies will start to see the actual impact of the U.S. enhanced tariffs on Chinese imports that are set to kick in beginning Sept. 1.
1. Apple
Apple (NASDAQ:AAPL) will be among the most exposed companies to the U.S.-China trade war and this coming week will see some of the company’s hardware hit by the higher tariffs.
Apple has been lobbying the Trump administration to find a way to save its products from the U.S. tariffs on Chinese imports. During a recent dinner with the president, Chief Executive Officer Tim Cook voiced concerns that Apple’s main rival, South Korea's Samsung Electronics (OTC:SSNLF) will get an edge since its products won’t be subject to the levies.
These worries have weighed on Apple shares, which have fallen about 7% during the past 12 months. They closed on Friday $208.74, down 0.25%.
The biggest risk that Apple is facing is a possible disruption of the company’s massive supply-chain system in China if the two countries fail to resolve differences.The iPhone, which accounts for more than half of Apple’s revenue, won’t be subject to this 15% tariff until Dec. 15. But the company's other hardware products won’t be able to escape the new tariff regime.
According to a Bloomberg report, a 15% tariff on Apple wearable gadgets sold in the U.S. would likely reduce earnings by $0.5 to $0.10 a share per year.
2. Zoom Video
Zoom Video Communications (NASDAQ:ZM), one of the most successful U.S. IPOs so far in 2019, will release its second quarter earnings on Thursday, Sept. 5, after the market close.
On average, analysts expect a penny a share profit on sales of $130.31 million. For the prior quarter, the video conferencing company had posted earnings that beat expectations, powering the stock’s 151% run since its IPO in mid-April. Its shares closed at $91.67, up about 1% on Friday.
One stark difference between Zoom Video and other high profile IPOs in 2019 has been that the company has shown profitability from day one of its public debut, unlike other tech names which typically burn significant amounts of cash ahead of any profitability. Zoom made $7.58 million in net income last year. Revenue surged 118% to $330.5 million.
The company is trying to make video communication frictionless, at a time when more employees work remotely, using conferencing services to connect with coworkers. International Data Corp. has estimated that the segments of the market in which Zoom operates could be worth as much as $43.1 billion by 2022, according to a regulatory filing.
3. Slack Technologies
Slack Technologies (NYSE:WORK), another newly-listed tech company, reports its second quarter earnings on Wednesday, Sept. 4, after the market close. Analysts, on average, expect a loss of -$0.18 a share on sales of $140.7 million.
Since it started trading on June 20, Slack shares have been on a downward slope, losing about a quarter of their value. They fell more than 4% on Friday to close at $28.64 a share.
Slack lost $31.9 million in the three months ended April 30, up 28% from the year prior, according to its filing with the U.S. Securities and Exchange Commission in June.
But even with widening losses, Slack is also expanding sales, which rose by 67% to $134.8 million in Q1 as the number of paying customers surged. The company may instill some life into its sagging stock if it reports a higher number of paying customers for the past quarter while also having succeeded in shrinking its losses for Q2.