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3 Things to Watch in the Stock Market This Week

Demitrios Kalogeropoulos, The Motley Fool

Stocks ticked lower to hold just under their highs for the year last week. Both the S&P 500 (SNPINDEX: ^GSPC) and the Dow Jones Industrial Average (DJINDICES: ^DJI) shed about 1% to leave investors' year-to-date returns close to 10%.

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Dozens of stocks take their turns in the spotlight this week with earnings reports that could produce volatility for shareholders. Below, we'll take a look at a few trends that investors will want to follow from Winnebago (NYSE: WGO), McCormick (NYSE: MKC) and Blackberry (NYSE: BB).

Winnebago's backlog

Winnebago surprised investors last quarter by reporting a double-digit sales gain and rising profitability despite worsening conditions in the recreational vehicle industry. But odds aren't great for a repeat performance in its fiscal second quarter report, due out on Monday.

For one thing, Winnebago back in December cited slowing dealership demand when it revealed falling order backlog for both its motorhome and towable divisions. Since then, rival Thor Industries described a tough selling environment that contributed to a 35% sales slump in the fiscal second quarter.

Most investors who follow the stock are expecting Winnebago to post a more modest 2% revenue contraction for the period. The RV manufacturer's gross profitability will be worth watching, too, for signs of heavy discounting. Finally, keep an eye on Winnebago's backlog of shipments set for the next six months, which will indicate which direction demand is moving right now.

McCormick's market share

Spice and flavorings giant McCormick will announce its latest operating trends on Tuesday in a report that should clear up a few big questions investors have about the business. Sales growth slowed last quarter, but management said most of the decline can be pinned on inventory moves by a single retailing partner rather than consumer demand issues. Tuesday's report would support that bullish reading as long as revenue gains continue at about the same 3% pace that management has predicted for the full 2019 year.

A home chef cooking.

Image source: Getty Images.

Meanwhile, McCormick is expecting a second straight year of rising profitability as its portfolio tilts further toward the high-margin condiment and sauce brands it added with its $4 billion of French's and Frank's. Healthy cash flow should allow it to pay down most of the debt it took on to make that purchase by 2020, at which point executives are planning to resume their prior aggressive pace of stock repurchase spending.

Blackberry's outlook

Blackberry is having a bumpy transition from a consumer electronics manufacturer to a software and services specialist, and the economics behind that shift will take center stage in its earnings report on Friday. The company's last announcement was a mixed bag, with sales declining slightly as profitability improved. Highlights of the quarter included healthy gains in its software and services segment, which management believes will help Blackberry achieve positive free cash flow for the fiscal 2019 year. The company has also predicted non-GAAP profitability for the period.

Look for management to highlight those financial successes in Friday's report while discussing how they see their latest acquisition, of cybersecurity specialist Cylance, impacting results going forward. Blackberry's fiscal 2020 outlook will be closely followed, since it might predict the sales stability and improving earnings profile that shareholders have been waiting to see for over a year.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends BlackBerry and McCormick. The Motley Fool has a disclosure policy.