5 Reasons to Worry About Next Week

It's been a good year so far. January has generally been good to investors.

This doesn't mean that everything's rosy. A grim housing report yesterday showed that sales of new homes fell for the first time in four months in December. Pair that up with a Wednesday report indicating soft pending home sales and you have a real estate market that is starting to fade despite the historically low mortgage rates.

It's not just the homebuilders going the wrong way. There are more than a few companies that aren't pulling their own weight in this supposed economic recovery.

There are still plenty of companies posting lower earnings than they did a year ago. Let's go over a few of the names that are expected to go the wrong way on the bottom line next week.

Source: Thomson Reuters.

Clearing the table
Let's start at the top with Amazon.com.

The leading online retailer is still a speedster. As large as Amazon has become, analysts still see a whopping $18.2 billion in net sales during its holiday quarter, a better than 40% surge on the top line.

The problem at Amazon rests on the bottom line. Selling Kindles at margin-busting price points isn't going to help near-term profitability, but it's all part of the company's master plan. The more Kindle e-readers and Kindle Fire tablets that Amazon can get in the hands of its consumers, the greater the eventual sale of high-margin digital downloads.

Plum Creek Timber is a timberland-based REIT, shelling out at least 90% of its income to investors for its tax-advantaged status. There are certainly REITs out there yielding more than Plum Creek's 4.2%, but this one's huge. Plum Creek considers itself to be the largest and most geographically diverse private landowner in the country, with roughly 6.8 million acres of timberland at its disposal. Wall Street still sees earnings slipping, and that was before we got the gloomy news on new residential construction sales for December.

AOL is a decade removed from its glory days of telling more than 20 million access subscribers "Welcome" and "You've got mail" to ignite their cyber-surfing experiences. AOL's access business continues to decline, as the dot-com pioneer focuses on the display advertising revenue of its many website properties.

Shutterfly is the popular provider of photofinishing products. It's certainly disappointing to see Wall Street bracing for a bottom-line dip during this quarter. Shutterfly may get a steady trickle of photofinishing and novelty orders throughout the year, but it's the holiday quarter that finds this seasonally potent company filling orders for bound photo albums and other photo-bearing gifts.

Finally, we have Royal Caribbean. This isn't the cruise line behind the Costa Concordia tragedy, but the industry is still connected. If folks are afraid to hit the open seas, it doesn't matter who is manning the ships.

Analysts still see Royal Caribbean's profitability shrinking for a quarter that ended several days before the fatal gashing of the Concordia. Pesky fuel prices have been roughing up margins, but we'll have to see if something else is at play.

Why the long face, short-seller?
These companies have seen better days. The market has rewarded many of these stocks with reasonable gains over the past year, but they still haven't earned those upticks. Lower earnings translates into higher earnings multiples, and nobody wants to see that happen.

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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