Will the three killer Ds -- Dubai, debt, and December -- kill the market's rally?
I recently went over seven bellwether companies that are expected to post lower earnings than they did a year earlier this week. I went over the backpedalling companies because they provide a sharp contrast to the past few months of heady stock gains.
There are exceptions, thankfully. If you know where to look, the next few days can also be an uplifting experience. Let's go over seven publicly traded companies that are expected to stand tall.
|
Company
|
Latest Quarter EPS (Estimated)
|
Year-Ago Quarter EPS
|
|
Shanda Interactive (Nasdaq: SNDA )
|
$0.88
|
$0.68
|
|
Universal Technical Institute (NYSE: UTI )
|
$0.19
|
$0.02
|
|
Aeropostale (NYSE: ARO )
|
$0.91
|
$0.63
|
|
Liquidity Services (Nasdaq: LQDT )
|
$0.12
|
$0.10
|
|
Toll Brothers (NYSE: TOL )
|
($0.40)
|
($0.49)
|
|
Toronto Dominion Bank (NYSE: TD ) *
|
$1.14
|
$1.10
|
|
Royal Bank of Canada (NYSE: RY )
|
$0.97
|
$0.92
|
Source: Yahoo! Finance, except as indicated. *Data from AOL Finance.
Clearing the table
Let's start at the top.
Shanda is a pioneer in the booming online gaming industry in China. The government is trying to curb that popularity, but the country's leisure-hungry youth are unlikely to put up with their Internet diversions taken away. The perceived risk has weighed on the sector, though. Shanda is expected to post 29% bottom-line growth for its latest quarter, but the stock is trading for just 14 times this year's projected earnings (and just 13 times next year's target).
Universal Technical Institute runs a network of technical schools, arming students for careers as automotive, diesel, collision repair, motorcycle, and marine technicians. Postsecondary schools dispensing college degrees online have been standouts in the recession, but it has been a little trickier for the hands-on blue collar schools. Universal Technical Institute has missed Wall Street's guesstimates in three of the past four quarters.
Aeropostale is bucking the mall malaise. Trendy apparel isn't typically a winner during economic downturns, but this chain has been snagging market share from its hipster rivals.
After a strong fiscal 2008, Liquidity Services bumped its head early in 2009. It didn't stay down for long, apparently. As an online marketplace for wholesale surplus and salvage assets, it's dealing with the perfect combination of distressed manufacturers with goods to move and consumers hungry for closeout deals.
Toll Brothers is a luxury homebuilder. It may take some time before real estate developers are profitable again. There is a glut of existing homes on the market, drying up the need for new construction. However, Toll Brothers isn't the only builder posting narrower deficits than it was a year ago. We may be talking baby steps here, but those are paces in the right direction.
Despite the onslaught of ads with Regis Philbin and Kelly Ripa here, TD Bank's parent company is Canada's Toronto Dominion. And then there's also Royal Bank of Canada. Checking in on back-to-back days at the end of the week will provide a great glimpse into the state of financial services up north.
Cross those fingers, but know the fundamentals
Investors in these seven stocks have a right to be pumped. They have chosen well in singling out the recessionary growers. It's not as easy as that, though. The market is assuming that the news will be positive on these equities, and that baked-in optimism can be problematic if the financials don't live up to the hype.
The expectations are high, but these seven companies wouldn't have it any other way.
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