5 Reasons Not to Worry This Week

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It's not a perfect world out there for investors, but things may be starting to get better.

Last week's run to a new Dow Jones Industrial Average high and the encouraging drop of the unemployment rate to its lowest level in more than four years are welcome signs.

I recently went over some of the companies that are expected to post lower quarterly profits when they report this week. 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

Rentech Nitrogen

$0.55

$0.30

Oracle

$0.66

$0.62

Ross Stores

$1.07

$0.85

KB Home

($0.22)

($0.59)

Nike

$0.67

$0.60

Source: Thomson Reuters.

Clearing the table
Let's start at the top with Rentech Nitrogen Partners.

Shares of the Rentech took a hit last month after Dahlman Rose's agriculture stock analyst downgraded some of the market's fertilizer stocks. He wasn't the only one souring on the limited partnership. Wall Street has been trimming its expectations on the company in recent months.

Three months ago, the pros figured that Rentech would earn $0.86 per unit for the quarter. Two months ago, those same analysts were hovering around $0.66 a unit, and last week it was $0.58 a unit. The good news for investors in the high-yielding Rentech is that the current target of $0.55 per unit is still well ahead of the $0.30 a unit it posted a year earlier.

Oracle is the leading enterprise software company.

CEO Larry Ellison is brash, charismatic, and a serial acquirer. He doesn't have a problem insulting his rivals and buying them out if it's strategically necessary.

Wall Street sees Oracle chiming in with quarterly net income of $0.66 a share. This would be modest improvement over the $0.62 a share it rang up during the same quarter a year earlier. Investors shouldn't be surprised if Ellison finds a way to earn more than the $0.66 a share that the pros are forecasting. Oracle has found a way to beat Wall Street estimates in 11 of the past 13 quarters.

Ross Stores runs the popular namesake department store chains that prides itself on selling brand names for less. Everyone loves a good bargain, and the discounter's 1,091 stores had a good holiday run. Ross Stores actually boosted its fiscal fourth-quarter guidance twice, and its latest update was calling for a profit per share of $1.06 to $1.07 on a 5% uptick comparable store sales.

Investors eyeing the pop from $0.85 a share during the prior year's holiday quarter to $1.07 a share this time around need to keep in mind that there was an extra week in the mix this time around. The additional week accounts for nearly half -- or $0.10 a share -- of the projected earnings growth.

Ross Stores also may be hitting some resistance here. Earlier this month, it revealed that comps actually turned slightly negative for the month of February. Investors will want an update on how the current quarter is trending, but the holiday quarter itself should be solid in Thursday's report.

KB Home also reports on Thursday. Home builders have been on fire lately. Home prices are firming up, and that's giving builders leverage to increase their prices. Contracted buyers also have less of an incentive to cancel their deals.

KB Home isn't profitable like most of its developer peers, but the good news is that the red ink should narrow substantially in its upcoming report.

Finally, we have Nike. The "Just Do It" company has been doing exactly that, growing beyond branded athletic footwear and apparel to become a wellness juggernaut. The global reach into fitness tech is opening new doors for Nike, and an improving economy is giving consumers greater flexibility in paying up for Nike's premium wares.

Wall Street sees Nike sprinting to double-digit earnings growth when it reports later this week.

Cross those fingers, but know the fundamentals
Investors in these five 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 five stocks wouldn't have it any other way.

If you prefer to invest in a basket of stocks instead of diving into these five growers, ETFs may be a smart way to go. To learn more about a few ETFs that have great promise for delivering profits to shareholders in a recovering global economy, check out The Motley Fool's special free report "3 ETFs Set to Soar During the Recovery." Just click here to access it now.

The article 5 Reasons Not to Worry This Week originally appeared on Fool.com.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Nike. The Motley Fool owns shares of Nike and Oracle.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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