7 Reasons Not to Worry This Week
Things aren't always pretty out there.
The world's largest retailer, Wal-Mart, is scaling back on health coverage to many of its employees. The financial crisis in Europe isn't an easy fix. Even hyped IPOs have had to slash their expectations to get their deals done.
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.
Latest Quarter EPS (estimated)
Year-Ago Quarter EPS
|Netflix (NAS: NFLX)||$0.95||$0.70||Add|
|3M (NYS: MMM)||$1.61||$1.53||Add|
|United Parcel Service (NYS: UPS)||$1.03||$0.93||Add|
|Sprint Nextel (NYS: S)||($0.22)||($0.30)||Add|
|Visa (NYS: V)||$1.25||$1.06||Add|
|IMAX (NYS: IMAX)||$0.21||$0.15||Add|
|PulteGroup (NYS: PHM)||($0.01)||($2.63)||Add|
Source: Thomson Reuters.
Clearing the table
Let's start at the top with Netflix.
The fallen market darling reports tonight, and it's easy to forget that Netflix is still a growing company -- at least on a year-over-year basis. The market's already braced for a sequential dip in subscribers, but the couch potatoes sticking around will be far more lucrative to the company under the new pricing model.
3M is the diversified industrial powerhouse behind Scotch tape, fiber terminal boxes, and a zillion other things. It's also the Post-It note of consistency. 3M has managed to increase its dividend for 53 years in a row. The best way to keep that streak going is by growing on the bottom line.
UPS may or may not be an ideal bellwether for the state of consumer spending. After all, it's really one of the biggest beneficiaries of the trend that finds traditional bricks-and-mortar shoppers turning to better deals online. However, is UPS also susceptible to the broader trend of digital distribution? Well, it's apparently not a problem right now.
Sprint finally began offering the iPhone this month, but profitability is still a couple of years away. The important thing for the wireless carrier is that at least its deficits are narrowing, though analysts see that trend reversing during the current quarter.
Visa is the better fit for taking the pulse of consumers than UPS, though it's also the beneficiary of more shoppers choosing plastic over paper at the register. Either way, the credit card marketer is looking good heading into Wednesday's quarterly report.
IMAX is the company behind the bigger-than-life projections that multiplex patrons are willing to pay a few bucks more for than traditional screenings. It's been a rough year for both exhibitors and IMAX, but analysts see the premium theatrical experience creator earning $0.21 a share in its latest quarter, ahead of the $0.15 a share it delivered a year ago.
Finally we have Pulte. Homebuilders aren't doing so well, and one can only imagine how much worse things would be if lenders weren't offering historically low mortgage rates. Potential homebuyers are still hesitant to snap up new digs until they feel that prices have finally bottomed, and we're not there yet. Home prices have fallen by 3.5% over the past year. The good news for Pulte is that analysts see the residential developer nearly breaking even this week, a far cry from the steep loss it posted a year earlier.
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 comment box below.
At the time this article was published The Motley Fool owns shares of United Parcel Service.Motley Fool newsletter serviceshave recommended buying shares of IMAX, 3M, Visa, and Netflix. 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.