It's not a perfect world out there for investors.
After a smoking hot first quarter -- one that found the S&P 500 rising by at least 3% or better in each of its three months -- Mr. Market is taking a breather.
With just a few hours left in the final trading day of the month, the S&P 500 closed out the weekend with a 0.4% decline in April.
I recently went over some of the companies that are expected 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.
Latest Quarter EPS (estimated)
Year-Ago Quarter EPS
|Office Depot (NYSE: ODP )||$0.05||$0.00||Add|
|Green Mountain Coffee (Nasdaq: GMCR )||$0.64||$0.48||Add|
|American Tower (NYSE: AMT )||$0.40||$0.23||Add|
|Level 3 Communications (Nasdaq: LVLT )||($0.51)||($1.80)||Add|
|ZAGG (Nasdaq: ZAGG )||$0.14||$0.13||Add|
Source: Thomson Reuters.
Clearing the table
Let's start at the top with Office Depot.
The country's second-largest office supplies superstore chain is back on the job. After posting three consecutive quarters of no more than breakeven results, analysts see Office Depot firmly in the black this time around.
Office Depot and its peers obviously were smarting when the economy turned south a couple of years ago. You can't expect an office supplies retailer to hold up well when companies are laying off hires (if not closing down).
The economy is showing signs of life here and there, and that's encouraging. It's also comforting to see Office Depot and its rivals holding up at a time when the whole "showrooming" trend -- with folks kicking tires of product at stores but buying them cheaper online -- is eating into several other specialties. Here's where Office Depot has been holding up well through its regional distribution centers and fleet of delivery trucks, allowing the chain to offer free overnight shipping on most orders of $50 or more.
Green Mountain Coffee Roasters has been grounded since last month's Verismo announcement. Green Mountain's most famous K-Cup partner rolling out its own single-serve coffee platform? Oh, no! However, it remains to be seen whether the market is open to a pricier espresso-centric machine than the Verismo-like appliances that are already on the market. Either way, Green Mountain should have a few quarters to continue building its lead with its popular Keurig machine that makes traditional low-pressure beverages.
American Tower operates a fleet of transmission towers that it then leases out to broadcasters and wireless carriers that need a boost in local reception. The company reorganized as a real estate investment trust recently, and that means that it's passing on most of its income to its investors. American Tower's a bit overvalued -- hence the modest 1.3% yield at the moment -- but analysts see profitability expanding dramatically this year.
Level 3 offers a broad array of Web-related services to its corporate clients. Some of its specialty areas are very competitive. It isn't easy to score decent margins as a content-delivery network these days, for example.
Yes, analysts see Level 3 posting a deficit of $0.51 a share when it reports on Thursday. That's certainly not pretty, but it's a far cry from the larger quarterly loss it generated a year earlier.
Finally, we have ZAGG. The company's flagship product is a thin patent-protected plastic sheet that protects the screen of smartphones, tablets, and other touchscreen devices. It also makes a growing line of third-party accessories for portable gadgetry.
There's a good reason to get excited about ZAGG's report after hearing that a better-than-expected 35 million iPhones were sold during the first three months of the year. ZAGG won't always be an effective iPhone bandwagon play, but for now it's playing out that way.
Cross those fingers, but know the fundamentals
Investors in these five 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 five stocks wouldn't have it any other way.