3 Things to Watch in the Stock Market This Week

By Demitrios Kalogeropoulos Markets Fool.com

Stocks fell by almost a full percentage point last week, but that wasn't enough to derail an impressive 2016 for both the Dow Jones Industrial Average(DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC). After the worst start to a year on record, and having touched double-digit declines at one point, the Dow ended up with a 13.5% annual gain as the S&P added 9.6%.

Continue Reading Below

^DJI data by YCharts.

The shortened trading week ahead could produce big price swings for investors in PriceSmart (NASDAQ: PSMT), Constellation Brands (NYSE: STZ), and Monsanto (NYSE: MON), as the companies are set to publish fresh quarterly updates on their business trends.

PriceSmart's Colombian outlook

PriceSmart, which operates membership-style warehouses primarily in Latin America, will post its earnings results on Thursday afternoon, with management's conference call with investors slated for the following morning. The retailer has struggled to post any growth at all recently, but the expansion trend is looking stronger lately. Comparable-store sales dipped by just 0.2% in the key shopping month of November, marking a welcome improvement over the prior quarter's 1.2% decline.

Continue Reading Below

This week's results are likely to be negatively impacted by currency devaluation in the Colombian market. Over the last 12 months, that economic disruption has hurt both sales growth and profits since management has been reluctant to raise prices even as costs spike higher, choosing instead to prioritize market share.

Improving revenue growth would imply an end to that squeeze soon, though. And that would give the company room to slowly bring its Colombian profit margins back in line with those seen in its other, more stable markets.

Monsanto's profit forecast

Agricultural giant Monsanto is due to post earnings results ahead of the opening bell on Thursday. Its stock has trailed the market slightly in 2016 as operating income slumps under the pressure of weak pricing on many of its core seed products. Execution slip-ups added to that decline last quarter, as a delay of its latest Roundup launch lowered soybean volume and contributed to profitability declines. Over the last nine months, Monsanto's net profit margin has declined to 14% of sales from 22% in the prior-year period.

Image source: Monsanto.

CEO Hugh Grant and his executive team believe cost cuts and product innovation have laid the foundation for a resumption of profit growth in 2017. In early October, they forecast earnings rising by 5% to $4.70 per share in the upcoming year. Shifts in demand for corn or soybeans could impact that projection even as investors wait for clarity around the proposed merger with German giant Bayer that executives hope will meet regulatory approval on its way to closing by the end of 2017.

Constellation Brands' beer volume

Constellation Brands is on a roll heading into its third-quarter earnings release this week. Over the past six months, sales have improved 15%, and earnings have soared at an even faster pace -- up 23%.

Image source: Constellation Brands.

The company is soaking up market share in the alcoholic beverage industry, especially in the premium imported beer segment. Its Corona Extra and Modelo Especial brands helped the beer division post 20% higher revenue as strong volume growth met with increasing average prices to send profitability up by 2 percentage points.

Constellation Brands may have trouble keeping that growth pace going in a highly competitive industry. Yet executives are optimistic that beer sales will grow by as much as 17% this fiscal year, which should power a 17% profit gain to roughly $6.38 per share. In addition to any changes in that outlook, investors will be watching for updates on the company's recent acquisitions along with news on how its aggressive capacity expansion initiatives are progressing.

10 stocks we like better than Constellation Brands
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now...and Constellation Brands wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of Nov. 7, 2016.

Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool recommends PriceSmart. The Motley Fool has a disclosure policy.