3 Stocks to Watch Out For: Nike; Bed Bath & Beyond; Micron Technology

Investors will get fresh guidance on the earnings outlook next week when some of the biggest US companies release their latest quarterly figures, amid speculation that higher interest rates and inflation could end the profit boom.

Investors have been selling out of stocks this year on fears of a recession after the US Federal Reserve made fighting inflation its main focus and began aggressive rate hikes. But leading US indices such as the S&P 500 and NASDAQ staged a major comeback last week after entering a bear market. The Dow Jones Industrial Average gained more than 800 points on Friday, rebounding from bear market lows last week. Amid this economic uncertainty, here are three key stocks to watch out for:

Nike

Nike reported earnings in March that beat analysts' expectations on signs the world's biggest sportswear brand is overcoming supply chain issues and weakness in China, one of its key markets. Supply chain issues that blocked trade routes continued to weigh on operations, and a larger-than-usual amount of the retailer's goods remained on the road, according to Nike executives. The company expected supply flows to improve in the previous quarter. Demand remains weak in China, where the government is implementing a zero-COVID policy, while recovering sales in North America and Europe are helping to offset some losses. Nike shares, down nearly 32% this year, closed at $112.91 on Friday.

Bed Bath & Beyond

BBBY shares, which closed Friday at $7, are down 50% this year as the retailer faces a high inventory problem amid uncertainty about its future. BBBY told investors in April that an "abnormally high" level of inventory was in transit, unavailable or being held at ports early in the fourth quarter. That contributed to a bigger-than-expected drop in sales, making it harder for the retailer to turn its business around. A string of weak quarterly reports is fueling debate over what Bed Bath & Beyond should do with its baby products business, which continues to grow despite a company-wide decline, Bloomberg reported. Activist investor Ryan Cohen, who won three board seats in March, has urged the retailer to consider selling the Buybuy Baby division or the entire company.

Micron Technology

The largest US memory chipmaker in March gave an upbeat forecast for the previous quarter, signaling that demand from data center customers remains strong.   Memory chips are now used in a wide range of devices, making them less exposed to fluctuations in demand for personal computers and smartphones. This has helped Micron continue to grow even as the PC market slows. Micron shares, which closed at $58.44 on Friday, are down 37% this year on investor concerns that demand could slow if the economy experiences a recession later this year.