A chipmaker and railroad stock: Traders share the top earnings reports to watch

Earnings season is picking up speed this week with 80 S&P 500 and eight Dow 30 components reporting results.

Top names scheduled to come out with earnings include IBM, Netflix, Tesla, AT&T and Coca-Cola.

Mark Newton, founder of Newton Advisors, is looking to rail stock CSX as a barometer for the economy and the consumer.

"Typically I look at the transportation sector as having the potential to either show some leading properties or weakening … in the economy," Newton told CNBC's "Trading Nation" on Friday. CSX "is a very interesting company that actually has gone largely sideways over the last couple years. We've seen this $80 level that has been hit literally three times since last May."

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"My thinking is the stock has managed to rally up yet again and challenge this important level right as the Dow Jones transports recently have broken out to new all-time high territory so I specifically would want to watch this carefully and I do like positioning long here expecting that this can actually exceed September highs and ensure a decent move into end of month," said Newton.

CSX has risen 11% so far this year, slightly more than the 10% gain for the Dow transports. The company is scheduled to report earnings after the bell Wednesday. CSX was up less than 1% in morning trading Monday.

Nancy Tengler, chief investment officer at Laffer Tengler Investments, is looking to the technology sector, instead.

"We're going to be watching Texas Instruments. It's a holding of ours. The company has raised the dividend 17% this year which is usually a good sign that management is confident about future earnings power," Tengler said during the same "Trading Nation" segment.

Texas Instruments yields 2.7%, while the SMH semiconductor ETF yields 1.1%.

"We really want to see how they do in the auto space and the industrial space. During the Covid initial crisis, they had said they were going to continue to produce and let inventories build, they were going to invest in R&D, and they were going to continue to invest in manufacturing infrastructure. That served them well in the second quarter, even though autos were down 40% sequentially and 40% year over year. So, ex-autos they were up 8% so if autos come back, we think that's going to be bullish," said Tengler.

Texas Instruments is set to report after the bell Tuesday. The company's stock was up less than 1% on Monday morning.

Disclosure: Laffer Tengler Investments holds TXN.


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