7 Reasons Not to Worry This Week

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Things aren't always pretty out there.

Even though Denver's Tim Tebow can win ugly -- as he has in five of his last six NFL starts -- Mr. Market isn't as lucky. When the economic news isn't humming along nicely, stocks will often take a beating.

I recently went over some of the companies posting lower quarterly profits and hosing down their near-term outlooks.

Thankfully, they're the exceptions and not the rule. Let's go over some publicly traded companies that are expected to stand tall this week by posting year-over-year improvement on the bottom line.

Company

Latest Quarter EPS (Estimated)

Year-Ago Quarter EPS

My Watchlist

Fifth Street Finance (NAS: FSC) $0.26$0.21Add
KongZhong (NAS: KONG) $0.10$0.03Add
Krispy Kreme (NYS: KKD) $0.06$0.03Add
La-Z-Boy (NYS: LZB) $0.14$0.07Add
American Software (NAS: AMSWA) $0.08$0.06Add
Barnes & Noble (NYS: BKS) $0.03($0.13)Add
Magma Design Automation (NAS: LAVA) $0.08$0.07Add

Source: Reuters.

Clearing the table
Let's start at the top with Fifth Street Finance.

The specialty finance company -- which today is moving its stock from the New York Stock Exchange to Nasdaq -- lends to and invests in small and midsized companies. It's certainly problematic to have seen Fifth Street Finance miss Wall Street's estimates in three of its past four quarters, but all three misses have been by no more than a penny or two per share. Even if it comes up short when it reports tomorrow, it probably won't be by enough to sink the quarter.

KongZhong is a provider of wireless value-added services and mobile gaming in China. KongZhong felt investor selling in its shares was overdone, so it announced a share buyback two months ago. If its bottom line keeps improving, it sounds like KongZhong is making the right call by repurchasing its stock here in the mid single digits.

Krispy Kreme is the doughnut giant that investors also seem to be glazing over these days. Save for one yeast-rising yet fleeting moment, shares of the popular company have been floating around in the single digits for the past four years. The market sees Krispy Kreme's profitability doubling in Wednesday's report.

La-Z-Boy is also expected to see its bottom-line results double this week. Don't get too excited. Folks aren't buying twice as many cozy recliners as they were last year. This is strictly a play on widening margins, as revenue is targeted to climb just 6% during the period.

American Software is a provider of demand-driven supply chain management and enterprise software solutions, though one of its most magnetic features is its chunky dividend. American Software yields a healthy 4.9%. As long as profitability keeps moving in the right direction, there should be no letdown on the payout front.

Barnes & Noble can now imagine a world without Borders. Its largest brick-and-mortar rival liquidated over the summer, but that doesn't mean that the bookseller can live happily ever after. There's a reason why Borders' creditors felt that the cavernous bookstore wasn't worth saving. Barnes & Noble has made smart moves by going after the e-reader market aggressively, but at what cost? Well, analysts feel that the company will squeeze out a small profit before likely eyeing a larger windfall during the meaty holiday quarter.

Finally we have Magma Design. The provider of electronic design automation software is slated to post just a marginal increase on the bottom line, but it has managed to land ahead of the pros in three of its past four quarters.

Cross those fingers, but know the fundamentals
Investors in these seven stocks have a right to be excited. They are all improving their financial situations. They are worthy of the gains that the market rally has bestowed upon them over the past year.

I wouldn't be uncomfortable owning any of these companies. They're doing the right thing, regardless of Mr. Market's mood swings.

The expectations may be high, but these seven stocks wouldn't have it any other way.

Are you a buyer or a seller of stocks these days? Share your strategy in the comments box below.

At the time this article was published Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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