• Fed FOMC minutes, Walmart earnings will be in focus in the holiday-shortened week ahead.
• Toast, a leader in restaurant technology, is expected to deliver a strong earnings report that could propel its stock higher.
• Occidental Petroleum faces significant challenges that could hamper its near-term growth, making it a stock to approach with caution.
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U.S. stocks closed mixed on Friday, but the S&P 500 and Nasdaq 100 still scored solid weekly gains amid bullish momentum in tech shares. For the week, the S&P 500 rose 1.5%, while the Nasdaq rallied 2.6% and the Dow Jones Industrial Average added 0.5%.
Source: Investing.com
The holiday-shortened week ahead is expected to be an eventful one as investors continue to gauge the outlook for the economy, interest rates, and inflation. U.S. markets will be closed Monday for the Presidents Day holiday.
In a data-light week, most of the focus will fall on the minutes of the Federal Reserve’s January FOMC meeting. This could give some insight into the future path of interest rates. As of Sunday morning, traders are pricing in at least one 25 basis-point rate cut by the end of 2025, with a roughly 50% chance of an additional cut, according to the Investing.com Fed Monitor Tool.
Source: Investing.com
Elsewhere, in corporate earnings, Walmart (NYSE:WMT), Carvana (NYSE:CVNA), Booking Holdings (NASDAQ:BKNG), Occidental Petroleum (NYSE:OXY), Arista Networks (NYSE:ANET), Analog Devices (NASDAQ:ADI), Block (NYSE:XYZ), Rivian (NASDAQ:RIVN), Toast (NYSE:TOST), Alibaba (NYSE:BABA), and Baidu (NASDAQ:BIDU) are some of the notable names lined up to report results.
Regardless of which direction the market goes, below I highlight one stock likely to be in demand and another which could see fresh downside. Remember though, my timeframe is just for the week ahead, Monday, February 17 - Friday, February 21.
Stock To Buy: Toast
Toast, a leading provider of cloud-based point-of-sale (POS) systems for restaurants, is poised for a strong earnings beat when it delivers its fourth quarter update after the closing bell on Wednesday at 4:05PM ET.
Market participants predict a sizable swing in TOST stock after the print drops, according to the options market, with a possible implied move of 13.7% in either direction. Shares gapped up 16.6% after the last earnings report in November.
In a sign of growing confidence, the restaurant management software provider, which has emerged as a key player in the restaurant technology arena, has received seven upward profit forecast revisions in recent days, with zero downward revisions.
Source: InvestingPro
Analysts forecast earnings per share (EPS) of $0.17, marking a significant turnaround in profitability from a loss of $0.07 per share in the year-ago period. Revenue is projected to rise by 31% annually to $1.31 billion thanks to growing user adoption, and operational efficiency improvements.
As restaurants increasingly adopt digital solutions to streamline operations, Toast’s integrated platform—offering everything from digital ordering and payroll to marketing and analytics—has garnered significant attention. Over 106,000 small-to-midsize restaurant clients rely on Toast’s all-in-one tools, creating sticky recurring revenue (85% of total sales).
Looking forward, I believe that Toast’s management will strike an optimistic tone in their forward guidance amid improving profitability trends and increased adoption of its integrated platform. Recent launches in Canada and the U.K. open a $35B+ total addressable market.
Source: Investing.com
TOST stock closed at $40.49 on Friday, earning the software-as-a-service company a valuation of $23 billion. Shares have more than doubled during the past 12 months, rising 108%.
It is worth noting that InvestingPro's AI-powered models rate Toast with a solid Financial Health Score of 2.8 out of 5.0, indicating solid operational performance, improving cash flow and growing profit margins.
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Stock to Sell: Occidental Petroleum
In contrast, Occidental Petroleum is facing an uphill battle heading into its Q4 earnings report due to a challenging energy market. Oxy is scheduled to release fourth quarter results after the market closes on Tuesday at 4:15PM ET.
According to the options market, traders are pricing in a swing of around 5% in either direction for OXY stock following the print.
The company’s outlook appears to be less optimistic, and analysts have recently revised their forecasts downward amid concerns over margin compression and slowed production growth.
Source: InvestingPro
Occidental is expected to post Q4 EPS of $0.67, falling 9.5% from the $0.74 profit recorded a year ago. Revenue is expected to decline by about 1% year-over-year to $7.1 billion. Weakness in crude oil prices (down 10% from Q3 averages) and lower chemical margins are key drags.
As a major oil and gas producer, Occidental has been grappling with persistent headwinds, including fluctuating oil prices, rising input costs, and geopolitical uncertainties.
With these pressures mounting, Oxy’s stock looks increasingly unattractive, suggesting that investors might consider selling or reducing their positions in the energy giant.
Source: Investing.com
OXY stock ended Friday’s session at $48.06, not far from a recent 52-week low of $45.17 touched Dec. 19. At current valuations, the Houston, Texas-based energy company has a market cap of $45 billion. Shares, which are trading below their key moving averages, are down 16.6% over the past year.
Be aware that Occidental currently has a below-average InvestingPro Financial Health score of 2.4 out of 5.0 due to lingering concerns about its debt-laden balance sheet, fading cash flow, and spotty revenue growth.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF (SPY (NYSE:SPY)), and the Invesco QQQ Trust ETF (NASDAQ:QQQ). I am also long on the Invesco Top QQQ ETF (QBIG), Invesco S&P 500 Equal Weight ETF (RSP), and VanEck Vectors Semiconductor ETF (SMH).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies' financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.