5 Reasons Not to Worry This Week
Things are starting to look up in 2012, but it's not all perfect.
The $143 billion payroll tax cut was approved by Congress on Friday, which is good -- consumers are going to need the money. Gasoline prices are averaging $3.53 a gallon, an all-time record for this time of year.
Making matters worse, analysts see gas prices trending up to $4.25 a gallon within two months, which would be an all-time high for spring.
I recently went over some of the companies that are targeted 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 YOY improvement on the bottom line.
|Company||Latest Quarter EPS (Estimated)||Year-Ago Quarter EPS|
|Mercadolibre (NAS: MELI)||$0.51||$0.36||Add|
|American Tower (NYS: AMT)||$0.30||$0.20||Add|
|Molycorp (NYS: MCP)||$0.41||($0.06)||Add|
|salesforce.com (NYS: CRM)||$0.40||$0.31||Add|
|TiVo (NAS: TIVO)||($0.25)||($0.30)||Add|
Source: Thomson Reuters.
Clearing the table
Let's take it from the top with Mercadolibre.
Latin America's top online marketplace has been growing faster than stateside auction sites for years. Analysts see Mercadolibre growing its revenue and earnings by more than 40% for the quarter.
Shares of Mercadolibre aren't cheap. The stock is trading at 55 times trailing earnings and 41 times projected profitability for the year ahead. Then again, consistent growth is always worth a healthy premium.
American Tower owns roughly 40,000 wireless communication sites all over the world. Leasing tower space to radio stations and wireless carriers is a pretty steady business. This year American Tower was transformed into a REIT, paying out the vast majority of its earnings in the form of a regular quarterly dividend.
Molycorp has been a roller coaster ride for investors. Rare-earth minerals -- a major component of many popular gadgets -- have had their ups and downs. The easing and tightening of production restrictions can send the specialists moving one way or the other.
When it comes to cloud computing, salesforce.com may well be the poster child. The company provides Web-based enterprise software solutions, giving companies more cost effective and portable applications than conventional corporate software.
Finally we have TiVo.
Yes, the DVR pioneer is still losing money, looking at 13 consecutive quarterly deficits in a row when TiVo reports on Thursday. Consumers are starting to watch TV in new ways, going from TiVo's time-shifting ways on pre-recorded programs to accessing a greater universe of streaming content on demand.
However, TiVo isn't going down without a fight. It's been using its patent-rich portfolio to successfully go after cable providers and satellite television companies that have been infringing on its intellectual property. More importantly, TiVo is starting to grow on its own.
TiVo closed out its most recent quarter with 117,000 more subscribers than it had when the period began. This may not seem like much of a feat, but it was actually the first time in four years that TiVo posted a sequential gain in accounts. TiVo is still seeing a decline in TiVo-owning subscribers -- the couch potatoes that it services directly -- but global partnerships are finally starting to pay off.
Shareholders will naturally want to see if TiVo is still taking steps in the right direction, and that's more important at this point than simply turning a profit, because settlement money will continue to trickle in for the near term.
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 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.
Expectations may be high, but these five stocks wouldn't have it any other way.
At the time this article was published Longtime Fool contributorRick Munarrizcalls 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.Motley Fool newsletter serviceshave recommended buying shares of American Tower, Salesforce.com, and Mercadolibre.Motley Fool newsletter serviceshave recommended shorting Salesforce.com. 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.
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