Earnings Edge: CSCO’s Pivotal Earnings and One Unlikely Space Stock

Earnings Edge: CSCO’s Pivotal Earnings and One Unlikely Space Stock

Two stocks on my Earnings Edge radar this week are tech company Cisco Systems Inc. (Nasdaq: CSCO) and manufacturing giant Deere & Company (NYSE: DE).

Notice how these two stocks seem like total opposites on the surface.

We have Deere in the agricultural and farm machinery industry with green tractors all over the Midwest. Then there’s Cisco and its data centers powering the opposite end of the spectrum with the communications equipment industry.

But one is on the verge of leapfrogging the other and capitalizing on one of the biggest opportunities in a century — the space race.

Cisco may be leading the technology push here on the ground, but it’s Deere & Company taking to the skies.

Deere has improved its precision agriculture, where it uses satellites to improve farming. It even partnered with NASA to help improve its self-driving tractors.

That’s why Deere got put into ARK’s latest ETF, the ARK Space Exploration & Innovation ETF (ARKX), and Cisco was left out.

The days of looking at a John Deere tractor and thinking it’s an old-school machinery company are over.

And any glimpse into their technological future will be laid out more in each of their upcoming earnings reports. Let’s unpack what we can expect this week from two tech stocks…

Stock No. 1: Cisco Systems Inc.

Earnings Announcement Date: Wednesday, after the close.

Expectations: Earnings at $0.82 per share. Revenue at $12.5 billion.

Average Analyst Rating: Outperform.

Cisco is first on our list today, and boy, has this stock been a buy.

Last week, it announced the acquisition of Socio Labs, a bet on the future of hybrid events— an event that combines in-person engagement with a virtual audience. It also acquired Israel-based Sedona Systems to boost the capabilities of Cisco’s networking segment.

But, the most exciting news lately was the introduction of Cisco Plus.

You’ve heard of SaaS (software as a service) models surging in recent years. Well, Cisco is taking it another step further and adding NaaS (network as a service). It’s a cloud model approach to networking and cybersecurity. Cisco will provide its product lineup in networks, security, storage and other applications to companies so they don’t have to build or maintain their own infrastructure. Cisco does all the work.

It’s another step in achieving the best experience as we shift to more hybrid workspaces.

The innovation to improve the workplace environment will continue to be Cisco’s bread-and-butter, and investors don’t mind it.

The company has a strong “outperform” rating based on the average of 23 analysts covering the stock, according to S&P Capital IQ.

And when we look at its price chart, we see the stock is steadily climbing higher, even with the volatility we saw last week. Take a look…

CSCO’s Uptrend Is Clear

CSCO uptrend

With a rising resistance line in red and a rising support line in green, we have a clear uptrend intact for the stock.

Remember, the trend is your friend. And as long as a stock is making higher highs and higher lows, don’t bet against it. That’s the case with Cisco right now.

Heading into earnings, traders are only looking for a 2% move this week. Now, the stock has been jumping or dropping by about 2% every day for a week now.

Earnings tend to be the most volatile trading days of the year for a stock.

So I’m expecting more fireworks this week when Cisco reports.

Whether it is good or bad it’s hard to tell. And with the stock trading in the middle of its rising price channel, this one could go either way.

Stock No. 2: Deere & Company

Earnings Announcement Date: Friday, before the open.

Expectations: Earnings at $4.48 per share. Revenue at $10.5 billion.

Average Analyst Rating: Outperform.

I’ll admit. I was shocked when I first saw the tractor giant — Deere & Company — listed as one of the stocks in a space exploration ETF.

It seems like a stretch.

But the more you dive into what the company is working on, you see how it benefits from the space race.

Deere isn’t trying to drop a tractor on the moon, though I’m sure it would be thrilled to be the first. Instead, it’s using satellites to create the future of farming.

It’s called precision agriculture.

Using satellite images to evaluate every aspect of farming, from soil variability to ideal weather patterns, has allowed farmers to do more with less.

It’s not new either. This has been going on for decades, but with the advancements in technology, Deere now has self-driving tractors, automation and NASA technology to help predict yields.

Deere is a winner from technology, and investors have been pushing the stock higher in recent weeks. Here’s the chart…

Deere May Break Out on Earnings

deere breakout

We have clear resistance levels (in red) and support levels (in green) to keep an eye on. It almost had a breakout higher last week, and then volatility sent DE right back into this rising wedge.

Now we have to wait for the next break higher, which could easily come on earnings this week.

The options market is looking for just a 2% move.

Again, with the volatility we have seen, 2% is nothing. These stocks are whipsawing by 2% every day. And I doubt earnings will be a non-event in the market. There’s a potential for a huge surprise here and quick profits with the right bet.

But that’s all it would be, a gamble.

If you want to find consistent gains from stocks, the trick is to wait until after the earnings announcement.

I explain how my ultimate trading strategy maximizes earnings after the report to find triple-digit gains in the stock market in this presentation. Click here to watch it today.


Chad Shoop is a Chartered Market Technician and options expert for Banyan Hill Publishing. He is the editor of three leading newsletters: Quick Hit ProfitsAutomatic Profits Alert and Pure Income. His content is frequently published on Investopedia and Seeking Alpha. Check out his YouTube Channel to see his latest market insights.

Click here to join his free newsletter, Weekly Options Corner.

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