Even though it's a new year, the market is still suffering from some of last year's maladies.
Sure, stocks have been on fire for nearly 10 months, but where are the fundamentals? I recently went over seven bellwethers that are expected this week to post lower earnings than they did a year earlier. Thankfully, there are also plenty of exceptions.
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 this week and kick off 2010 the right way.
|
Company |
Latest Quarter's EPS (Estimated) |
Year-Ago Quarter EPS |
|---|---|---|
|
Sonic |
$0.14 |
$0.12 |
|
Bed Bath & Beyond |
$0.43 |
$0.34 |
|
Family Dollar |
$0.47 |
$0.42 |
|
Immucor |
$0.26 |
$0.24 |
|
RPMInternational |
$0.34 |
$0.33 |
|
Apollo Group |
$1.45 |
$1.12 |
|
Lennar |
($0.47) |
($5.12) |
Source: Yahoo! Finance.
Clearing the table
Let's start at the top.
Sonic runs the popular chain of drive-in eateries. It fills up thrifty drivers with chili dogs, slushies, and milkshakes. Fast-food chains with value-priced menus have thrived in this dreary climate, but Sonic has helped out its cause even more by slashing expenses and successfully refranchising many of its restaurants.
Bed Bath & Beyond operates the well-known superstore chain that sells everything from shower curtains to margarita makers. The retailer has been able to improve margins and inventory levels lately, and that goes a long way in improving earnings at a time when shoppers aren't lining up at the registers.
Family Dollar has had no problem attracting shoppers, though. When consumers want more bang for their bucks, the clarion call of general merchandise discounters sounds like dinner bells.
Is it safe to say that Immucor shareholders have positive blood types? The blood-diagnostics giant should post a profit of $0.26 a share on Wednesday, a positive gain from the $0.24 a share it earned during last year's fiscal second quarter.
RPM International is a maker of specialty coatings and sealants. Its brands include Rust-Oleum and Day-Glo. This is probably a steadier company than you think. RPM has boosted its quarterly dividend in each of the past 36 years.
Apollo Group is the leader in online post-secondary education. Web-based curricula have thrived during the recession, as folks seek to pad their resumes with educational solutions that are cheap and flexible. Cynics have taken Apollo to task for its aggressive course-marketing tactics, but it's hard to argue with the educator's healthy and consistent bottom-line growth.
Finally, we have homebuilder Lennar. Real-estate developers haven't necessarily turned the corner. We may still be a couple of years away before they're generating profits again. However, Lennar should join many of its peers in posting narrowing deficits, and that's a good start.
Cross those fingers, but know the fundamentals
Investors in these seven stocks have a right to be excited about 2010. They have chosen well in buying the companies that are improving their bottom lines during this brutal economic downturn.
Unfortunately, Mr. Market is never that easy to figure out. 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 stocks wouldn't have it any other way.
Some other reads to get you through the week:
