Markets need a strong job market, tame inflation

CNBC’s Jim Cramer told investors on Friday that stocks could see another strong week of trading, given the right economic conditions.

“As the year goes on, the holidays will become more and more focused. Now, the forecast is cloudy – a lot of cross flows. But if the labor market remains strong and inflation remains moderate, we can still have one more very good week,” he said.

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Stocks closed for the week on Friday, the first time since October that the three major indexes saw consecutive weekly gains.

Markets were volatile this week as investors reacted to Federal Reserve Chairman Jerome Powell’s signal that the central bank may soon begin to slow the pace of interest rate hikes and warm wage and labor data.

Cramer said he was keeping an eye on the producer price index and the University of Michigan’s Consumer Sentiment Index reports to be released next week, and worried that sentiment might be too cold.

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“It’s true, we need a lot, we need a lot of power, if only to save Christmas for sales,” he said.

He also presented next week’s earnings forecast. All earnings and revenue estimates are courtesy of FactSet.

Tuesday: AutoZone, Toll Brothers, SentinelOne

AutoZone

  • Q1 2023 earnings release at 6:55 am ET; conference call at 10 am ET
  • Proposed EPS: $25.3
  • Projected income; 3.86 billion dollars

He said the stock has been his favorite for years.

Toll Brothers

  • Q4 2022 earnings release at 4:30 pm ET; conference call on Wednesday at 8:30 am ET
  • Proposed EPS: $4.01
  • Estimated revenue: $3.17 billion

While it’s generally advised not to buy housing stocks going into a bullish cycle that could trigger a recession, Powell’s recent comments could make the stock an attractive investment, Cramer said.

SentinelOne

  • Q3 2023 earnings release after closing; conference call at 5 pm ET
  • Estimated loss: loss of 11 cents per share
  • Estimated revenue: $180 million
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He said he didn’t know when the stock would go.

Wednesday: Campbell Soup, Ollie’s Bargain Outlet Holdings, Brown-Forman, Lowe’s

Campbell’s soup

  • Q1 2023 earnings release at 7:30 am ET; conference call at 8 am ET
  • Proposed EPS: 88 cents
  • Estimated revenue: $2.45 billion

He said the company has been “reinvented” by CEO Mark Clouse.

Ollie’s Bargain Outlet Holdings

  • Prior to the Q3 2022 earnings release call; conference call at 8:30 am ET
  • Proposed EPS: 40 cents
  • Estimated revenue: $429 million

The company is a “good-looking” stock, meaning its quarter should have impressive results, Cramer said.

Brown-Forman

  • Q2 2023 earnings release at 8 am ET; conference call at 10 am ET
  • Proposed EPS: 55 cents
  • Estimated revenue: $1.08 billion

Cramer noted that liquor sales tend to recover in the recession, which is good news for the Jack Daniel’s distiller.

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Thursday: Broadcom: Costco, Lululemon Athletica

Broadcom

  • Q4 2022 earnings release at 4:15 pm ET; conference call at 5 pm ET
  • Estimated EPS: $10.3
  • Estimated revenue: $8.90 billion

The semiconductor company will report big earnings even as cloud growth slows, Cramer predicted.

Costco

  • Q1 2023 earnings release at 4:15 pm ET; conference call at 5 pm ET
  • Estimated EPS: $3.12
  • Projected income; 58.36 billion dollars

While the retail quarter will likely be solid, the best stock is TJX, he said.

Lululemon Athletica

  • Q3 2022 earnings release at 4:05 pm ET; conference call at 4:30 pm ET
  • Proposed EPS: $1.96
  • Estimated revenue: $1.81 billion

Cramer said he is betting that Lululemon will beat Wall Street’s expectations in its next quarter.

Disclosure: Cramer’s Charitable Trust owns shares of Costco and TJX.

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