Stocks to Watch in March
The technology sector has been driving the market's gains in 2019, and it will continue to play a big role in shaping the stock market's performance for the year.
Investors with an interest in the tech space or who are on the hunt for potentially significant movers this month should keep an eye on Micron Technology (NASDAQ: MU), Tencent Holdings (NASDAQOTH: TCEHY), and Take-Two Interactive (NASDAQ: TTWO).
Storage-chip stocks have posted big declines over the last year as inventory buildup and waning demand created weaker pricing for DRAM and NAND flash memory. Micron is scheduled to report second-quarter earnings on March 20 after the market closes, and it's an earnings release that will be watched closely because it could have significant implications for the near-term performance of the tech hardware sector. The company's business hinges on the sale of NAND and DRAM, and commentary from management could provide some insight into the outlook for the memory and storage market and the overall tech hardware space. It wouldn't be the first time.
Micron's chief financial officer said at a conference last September that the business was seeing weaker demand for NAND, and the news helped kick off the big correction in memory-chip stocks and had ripple effects across the chip market and tech sector. Demand for memory tends to reflect trends in the overall PC, mobile, and data center markets, so it's not unreasonable that investors and analysts are looking to Micron as a potential bellwether.
Prices for DRAM have recently been falling off a cliff, dropping somewhere in the neighborhood of 30% globally, and investors will be watching to see if the company expects any stabilization or recovery on that front. Comments from management might also give some indications into the types of headwinds that major tech players are seeing from tariffs and trade tensions with China.
The average analyst estimate calls for earnings per share of $1.70, down roughly 40% from the quarterly earnings it posted in the prior year due to headwinds in the memory chip business.
With so many different components to its business and a wide array of investments in other leading tech companies, it seems like there's always some big news happening for Tencent. That said, March looks to be an especially busy month for the multimedia giant.
Tencent is scheduled to report fourth-quarter and full-year earnings after the market closes on March 21, and investors will be waiting to get the latest details on the company's fast-growing payment and cloud services ventures and updates on its gaming, social media, and digital content businesses. The average analyst estimate pegs the company's second-quarter earnings per share to come in at $0.26.
The company also recently released a big new game in China, Perfect World, with the title going on to nab the top spot in both the free-download and top-grossing charts on iOS and Android platforms according to AppAnnie. The company's gaming business has been pressured due to China's shifting online content regulation bodies and policies, and it's worth keeping an eye on how Perfect World performs as an indicator for Tencent's gaming division and the broader industry in the country.
China's government has been restructuring the organizations involved in granting release licenses and enforcing content standards, and it's resulted in a series of twists and turns that have complicated the company's outlook in the space. That said, Tencent is pushing ahead and still has favorable long-term prospects in interactive entertainment.
Tencent is expected to unveil its cloud-based video game platform at the Game Developers Conference happening this week. The platform is expected to allow users to stream video games in the same way that they might stream movies or television shows on a platform like Netflix. Tencent's strong positions in gaming, social media, and the cloud make the company a likely leader in the streaming-gaming battle that's heating up. When placed in the context of the company's video streaming business and recently spun off Tencent Music unit, success in streaming gaming would give it a comprehensive streaming ecosystem -- and this comprehensive media push can be expected to play a key role in the company's performance over the next decade.
Rumors spread through the gaming world earlier this month that PlayStation maker Sony (NYSE: SNE) would try to buy Take-Two Interactive. Subsequent comments from Sony's president suggest that the acquisition isn't in the cards, but the rumors have given Take-Two stock some momentum and are just one more reason to watch the company in what looks to be an exciting month.
Take-Two Interactive has mentioned multiple times that it has a major, unannounced game due for release in its next fiscal year, and it looks like the upcoming project could be unveiled soon. Comments on Twitter from people associated with the company strongly suggest that Take-Two will have something new from the Borderlands franchise to show off at the PAX East conference on March 28.
Borderlands 3 has been rumored to be in development for a while. The series' last mainline release debuted in 2012, was supported for years through a series of add-on content, and more recently had a virtual reality enabled version launch for PlayStation 4 and PC platforms. Borderlands 2 put up strong sales and was generally well received, and the series' multiplayer-focused online gameplay and distinct aesthetic give a hypothetical sequel a good chance of raising the franchise's profile if the game delivers a quality experience.
With Grand Theft Auto V still putting up impressive performance, Red Dead Redemption 2 off to a great start, and the NBA 2K basketball franchise in good shape, Take-Two already has a solid trio of core franchises. Elevating the Borderlands property would provide a meaningful boost for the company's growth engine, so it's worth keeping an eye out for developments around this year's PAX East and big announcements from Take-Two.
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Keith Noonan owns shares of Take-Two Interactive. The Motley Fool owns shares of and recommends Netflix, Take-Two Interactive, and Tencent Holdings. The Motley Fool has a disclosure policy.