7 Reasons Not to Worry This Week

Things aren't always pretty out there.

You may have to go all the way back to March 2009 to find the last time that the market averages posted the kind of gains that we experienced last week, but this doesn't mean that we're in for the mother of all Santa Claus rallies in the coming days.

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 year-over-year improvement on the bottom line.

Company	Latest Quarter EPS (estimated)	Year-Ago Quarter EPS	My Watchlist
AeroVironment (Nasdaq: AVAV  )	$0.20	$0.01	Add
AutoZone (NYSE: AZO  )	$4.44	$3.77	Add
Liquidity Services (Nasdaq: LQDT  )	$0.19	$0.13	Add
NCI Building Systems (NYSE: NCS  )	($0.21)	($1.01)	Add
Vera Bradley (NYSE: VRA  )	$0.28	$0.25	Add
Ciena (Nasdaq: CIEN  )	$0.08	($0.18)	Add
Pall (NYSE: PLL  )	$0.65	$0.62	Add

Source: Thomson Reuters.

Clearing the table
Let's start at the top with AeroVironment.

The maker of unmanned aircraft vehicles -- you know, those cool and compact flying contraptions that can spare troops on dangerous recon and surveillance missions by swooping in alone -- is apparently holding up pretty well on the bottom line these days. Analysts see a dramatic uptick in profitability. There will always be fears that military defense spending will contract, but AeroVironment's ability to keep soldiers out of harm's way is too strong a selling point.

AutoZone runs a popular chain of stores selling auto parts. The retailer has thrived during the market lull, as folks that can't afford to buy new cars or have no choice but to settle for used vehicles need to invest more in routine maintenance and replacement parts.

Liquidity Services lives up to its name, manning a Web-based auction marketplace that finds new homes for wholesale surplus and salvage assets. There always seem to be manufacturers with excess inventories and deal-sniffing outlets looking to move them if the markdowns are just right.

NCI Building Systems makes metal coil coating services, metal building components, and engineered metal buildings systems. NCI's emphasis on the non-residential industry has helped offset the sting of new housing's meltdown in recent years, but it's not as if the market's been all that rosy for commercial real estate. NCI has posted seven consecutive quarterly deficits. The pros see that streak stretching to eight periods of red ink, but the more welcome trend is that this should be the third straight quarter consisting of narrowing losses.

Vera Bradley makes handbags, accessories, and travel gear. Vera Bradley went public last year, managing to beat Wall Street's profit targets in three of its first four quarters since its IPO. This bodes well as we head toward tomorrow's earnings report.

Ciena is a tech giant with interests in optical networking and enterprise software. Despite its negative tangible book value, it bears pointing out that Ciena's projected to post a profit this quarter. The move would reverse a substantial deficit posted during the same period a year earlier.

Finally we have Pall. The pros see the filtration specialist earning $0.65 a share, just ahead of the $0.62 a share that it rang up a year ago. Pall has been aggressively buying back its shares, so investors will want to make sure that Pall's earnings growth is really happening at the net income level -- and not simply the act of dividing flat or lower profits into fewer shares outstanding -- to get a true snapshot of the situation.

Cross those fingers, but know the fundamentals
Investors in these seven stocks have a right to be excited. They are all improving their financial situations. They are worthy of the gains that the market rally 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.

The expectations may be high, but these seven stocks wouldn't have it any other way.

Are you a buyer or a seller of stocks these days? Share your strategy in the comment box below.