7 Reasons to Worry About Next Week

A decent start to July has helped investors wash away memories of a brutal second quarter, but I'm not entirely convinced the good times will last.

Stocks may be racing higher, but not every stock has proven itself worthy of the market's improving sentiment. Many companies will rain on investors' parade during earnings season, targeted to post lower quarterly profits next week than they did a year ago.

Let's go over a few of the blue chips and seemingly recession-proof companies predicted to post bottom-line slumps next week. Some of the names may surprise you.

Company	Latest Quarter EPS (Estimated)	Year-Ago Quarter EPS
Cintas (Nasdaq: CTAS  )	$0.33	$0.38
Goldman Sachs (NYSE: GS  )	$2.07	$4.93
Wells Fargo (NYSE: WFC  )	$0.48	$0.57
TD AMERITRADE (Nasdaq: AMTD  )	$0.28	$0.30
Baxter (NYSE: BAX  )	$0.92	$0.96
Eli Lilly (NYSE: LLY  )	$1.10	$1.12
Safeway (NYSE: SWY  )	$0.37	$0.57

Source: Yahoo! Finance.

Clearing the table
Several companies will post lower earnings next week, but these are just a few of the names that really jump out at me.

Let's start with Cintas. The leading player in corporate uniforms and supplies is expected to post a dip in profitability on Tuesday. This obviously doesn't bode well for the economic recovery. If companies aren't ordering up more freshly washed uniforms, they probably aren't hiring.

"We have grown 39 consecutive years, through all economic cycles," read Cintas' investor relations page a year ago. It doesn't read that way anymore.

Goldman Sachs and Wells Fargo are two of the "too big to fail" giants, though they carve out different specialties in financial services. Goldman Sachs is the poster child for investment banking, while Wells Fargo is a major player in conventional banking through its namesake institution and its acquisition of Wachovia. Either way, both companies are expected fall well short of their year-ago numbers on the bottom line.

TD AMERITRADE is one of the leading discount brokers. Its sector hasn't been the investing hotbed one would expect since last year's healthy rally. The market is getting very competitive, with a price war in trading commissions, the popularity of commission-free ETFs, and low interest rates eating away at margins.

Lilly and Baxter are major players in health care, though Lilly is primarily a pharmaceuticals company. Baxter also dabbles in medical equipment. Among the seven stocks in this list, Lilly and Baxter have the smallest projected declines on a percentage basis, but an arrow pointing down is still pointing down.

Finally, we have Safeway. Supermarkets were once considered all-weather investments; in recession or economic expansion, folks still need to stop by the local store every week to refill their refrigerators. But this should be the fourth consecutive quarter in which Safeway delivers less net income year over year.

Why the long face, short seller?
These reports aren't likely to be pretty, but there's still room for glimmers of optimism within the pessimism.  

Investors are already braced for the worst with these reports. If there is an upside to this grim list, it's that lower profitability is already baked into next week's reports. Wall Street's doom and gloom actually opens the door for unexpected surprises.

The more I think about it, the less worried I become.