7 Reasons to Worry About Next Week

Easy come, easy go.

The Nasdaq Composite turned negative for all of 2010 this week. As a bellwether -- particularly for the tech stocks that helped fuel last year's rally -- it's certainly not encouraging to see the major indices slip into the red.

Everything seemed so promising earlier this year, but that's what happens when more and more people warn of the possibility of a double-dip recession.

The bad news doesn't end there. There are still plenty of companies posting lower earnings than they did a year ago. Let's go over a few of the pretenders that are expected to go the wrong way on the bottom line next week.

Source: Yahoo! Finance.

Clearing the table
There will be more companies posting lower earnings next week; these are just a few of the names that really jump out at me.

eLong is a Chinese travel portal. Few deny that corporate and leisure travel will be growth industries in the coming years. China's largest online travel site posted healthy metrics earlier this week, with revenue climbing 46% and earnings clocking in nicely higher.

Unfortunately, eLong isn't keeping up. Analysts see revenue inching merely 9% higher here, and Wall Street's projected profit of $0.04 a share is well short of last year's bottom-line performance.

Staying in China, Perfect World is an operator of popular online games. This has historically been a growth industry, though concerns always persist about China's restrictive ways. The problem here is that many of Perfect World's peers have posted year-over-year improvement -- or are expected to post higher quarterly profits later this month.

Vitacost went public last fall at $12 a share, hoping to cash in on the Web-based vitamin retailer's heady growth and improving profitability. This is a competitive niche, particularly online, but Vitacost seemed to sweeten the pot by deriving nearly a third of its revenue from proprietary products.

Shares of Vitacost cratered back in April, after the e-tailer hosed down its guidance. There was an issue at one of its manufacturing plants, but its higher-margin proprietary products were also taking a hit. The stock broke below its $12 IPO price and has gone on to fall into the single digits. Investors are weary of stocks that disappoint early in their public tenures, and Vitacost has an uphill battle to win back Mr. Market's trust.

China Digital TV is the leading maker of smartcards in the world's most populous nation. China is set on converting to digital television by 2015, so the prospects look good for the company over the next few years. It commands slightly more than half of the smartcard market that will be necessary to make the switch. Unfortunately it's still a long way between 2010 and 2015, and the slight dip in year-over-year targeted net income proves it.

Hot Topic and Buckle were industry-bucking specialty retailers just a couple of years ago. Hot Topic was riding high on the popularity of alternative clothing when the Twilight craze turned wearers of colorful preppy garb into solemn faux vampires donning darker, indie clothing. Buckle was able to resist the tumble that many mall dwellers suffered during the early stretch of the recession by posting stellar comps. Well, the tide has turned for both companies, though the problem is more pronounced at Hot Topic, where this quarter's deficit is expected to widen.

Finally, we have Lancaster Colony. The eclectic conglomerate makes glass candles, Marzetti salad dressings, and frozen Texas Toast garlic bread. Lancaster's odd portfolio usually works, as the company has managed to increase its dividend for 47 consecutive years. Unfortunately, earnings will not be playing along this quarter if the analysts are right.

Why the long face, short-seller?
These seven companies have seen better days. The market has rewarded many of these stocks with healthy gains over the past year, but they still haven't earned those upticks.

The good news here is that Wall Street already expects these companies to deliver shrinking bottom lines. In other words, the bad news is already baked into the shares.

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

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