Top 5 Stocks to Watch in July 2022

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BY:RYAN SULLIVAN | 5 July 2022 | Tastytrade

Where does the S&P 500 stand?

Two quarters are in the dust for 2022 and we have watched the S&P 500 get beaten up for the last six months. The SPY is currently trading at $375.31, down 21.46% from the opening price of 2022 and up 3.4% from a recent new 2022 low on June 17th. SPY remains in a bear market, recording lower lows and even lower highs.

Reviewing the first half of 2022, we have observed rising inflation and continual rate hikes. As fear of economic recession has become a common talking point, the market continues to search for buyers. As more dollars chase fewer goods, it seems that we will not see a change in market behavior until the economic factors that cause increases in cost find equilibrium.

Remaining bearish so far in 2022 has been profitable. Each new market low has been met with buying pressure and each bear market rally is met with a larger number of sellers. Even though there appears to be attractive price levels for many popular market assets, overall selling pressure continues to outweigh buying pressure across the market.

Fig. 1: Six-month price percent change for SPY, TLT, and GLD.

Top Stocks to Watch in July

1. Delta Air Lines, Inc. (DAL)
2. Bank of America Corp. (BAC)
3. AT&T (T)
4. Coca-Cola Co. (KO)
5. Merck & Co., Inc. (MRK)

Fig. 2: Six-month price percent change for SPY, DAL, BAC, T, KO, and MRK.

 Delta Air Lines, Inc. (DAL)

Earnings Date: July 13th, 2022 (Before the open)

Delta (DAL) is currently trading at $29.03, up 3.33% from its 2022 low of $28.10 on June 30th. DAL is currently down 37.26% from its 2022 high of $46.27 on April 21st. IV Rank is currently 70.1, based on the tastyworks calculation. The bid-ask spread for at the money options in August are $0.04–$0.08 wide.

Delta’s last two quarters of earnings reports have shown us sales above $9 billion and net negative income below $1 billion. However, the last two quarters of 2021 showed us profitability around $1 billion. Delta’s balance sheet for the last four quarters has remained consistent with total assets falling between $72 and $76 billion, and total liabilities remaining between $68 and $74.1 billion. Delta’s earnings reports over the last four quarters have been mixed.

Delta’s tight markets, high volume, and high IV Rank make it a good choice for premium selling strategies. With earnings on July 13th, earnings options plays can be made using July expiration options or August expiration options. Delta’s expected move for the next 49 days is about +/- $4.38.

 Bank of America Corp. (BAC)

Earnings Date: July 18th, 2022 (Before the open)

Bank of America (BAC) is currently trading at $31.00, up 1.17% from its 2022 low of $30.64 on July 1st. BAC is currently down 38.08% from its 2022 high of $50.11 on February 10th. IV Rank is currently 54.7, based on the tastyworks calculation. The bid-ask spread for at the money options in August are $0.01–$0.03 wide.

Bank of America’s last four quarters of earnings reports have shown us sales between $22 and $25 billion, and net income between $9.3 and $7 billion. The last four quarters have shown a decreasing net income. Bank of America’s balance sheet has risen consistently for the last four quarters. Total assets have grown from about $3 billion to $3.2 billion, and total liabilities have risen from about $2.7 billion to $3 billion. Bank of America’s earnings reports over the last four quarters have been mixed.

Bank of America’s tight markets, high volume, and high IV Rank make it a good choice for premium selling strategies. With earnings on July 18th, investors should look to the August monthly expiration options for earnings options plays. Bank of America’s expected move for the next 49 days is about +/- $3.03.

 AT&T (T)

Earnings Date: July 21st, 2022 (Before the open)

AT&T (T) is currently trading at $21.06, up 23.19% from its 2022 low of $17.10 on February 24th. T is currently down 2.28% from its 2022 high of $21.53 on May 26th. IV Rank is currently 61.6, based on the tastyworks calculation. The bid-ask spread for at the money options in August are $0.01–$0.04 wide.

AT&T’s last four quarters of earnings reports have shown us decreasing sales from about $44 to $38.1 billion and net income between about $1.5 and $5.9 billion. AT&T’s balance sheet has risen for the last four quarters. Total assets have grown from about $544 billion to $577 billion and total liabilities have risen from about $364 billion to $390 billion. AT&T’s earnings reports over the last four quarters have remained relatively consistent.

AT&T’s tight markets, high volume, and high IV Rank make it a good choice for premium selling strategies. With earnings on July 21st, investors should look to the August monthly expiration options for options plays. AT&T’s expected move for the next 49 days is about +/- $1.27.

 Coca-Cola Co. (KO)

Earnings Date: July 26th, 2022 (Before the open)

Coca-Cola (KO) is currently trading at $63.54, up 10.50% from its 2022 low of $57.50 on February 24th. KO is currently down 5.42% from its 2022 high of $67.20 on April 25th. IV Rank is currently 54.8, based on the tastyworks calculation. The bid-ask spread for ATM options in August are $0.03–$0.04 wide.

Coca-Cola’s last four quarters of earnings reports have shown us sales between $9.4 and $10.5 billion, and net income between $2.4 and $2.8 billion. Coca-Cola's balance sheet has moved in an upward trend for the last four quarters. Total assets remained between about $90.1 billion and $94.4 billion, and total liabilities have remained between about $66.4 billion and $69.5 billion. Coca-Cola’s earnings reports over the last four quarters have remained consistent.

Coca-Cola’s tight markets, high volume, and high IV Rank make it a good choice for premium selling strategies. With earnings on July 26th, investors should look to the August monthly expiration options for options expiration plays. Coca-Cola’s expected move for the next 49 days is about +/- $3.63.

 Merck & Co., Inc. (MRK)

Earnings Date: July 28th, 2022 (Before the open)

Merck (MRK) is currently trading at $90.90, up 24.73% from its 2022 low of $72.88 on February 24th. MRK is currently down 5.09% from its 2022 high of $95.72 on July 1st. IV Rank is currently 44.7, based on the tastyworks calculation. The bid-ask spread for ATM options in August are $0.07–$0.15 wide.

Merck’s last four quarters of earnings reports have shown us sales between $11.4 and $16 billion, and net income between $1.5 and $4.6 billion. Merck 's balance sheet has moved in an upward trend for the last four quarters. Total assets remained between about $90.6 billion and $106.7 billion, and total liabilities have remained between about $57.3 billion and $67.5 billion. Merck’s earnings reports over the last four quarters have shown us growth.

Merck’s tight markets, high volume, and high IV Rank make it a good choice for premium selling strategies. With earnings on July 28th, investors should look to the August monthly expiration options for options expiration plays. Merck’s expected move for the next 49 days is about +/- $5.96.

Additional Stocks to watch in July 2022 (In no particular order.)

• JPMorgan Chase & Co. (JPM)
• Morgan Stanley (MS)
• Halliburton Co. (HAL)
• Abbott Laboratories (ABT)
• Verizon Communications Inc. (VZ)
• General Electric Co. (GE)
• United Parcel Service Inc. (UPS)
• Cameco Corp. (CCJ)
• Spotify Technology S.A. (SPOT)
• Southwest Airlines Co. (LUV)
• Phillips 66 (PSX)
• Well Fargo & Co. (WFC)
• Johnson & Johnson (JNJ)
• AstraZeneca PLC (AZN)
• Citigroup, Inc. (C)