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.
April was a dud, and May is off to an even uglier start.
I recently went over some of the companies that are expected to post lower quarterly profits when they report this week.
Thankfully, they are 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
|Jamba (Nasdaq: JMBA )||($0.06)||($0.11)||Add|
|MAKO Surgical (Nasdaq: MAKO )||($0.20)||($0.27)||Add|
|Cisco Systems (Nasdaq: CSCO )||$0.47||$0.42||Add|
|SodaStream (Nasdaq: SODA )||$0.36||$0.27||Add|
|Universal Display (Nasdaq: PANL )||$0.05||($0.08)||Add|
Source: Thomson Reuters.
Clearing the table
Let's start at the top with Jamba.
The parent company behind the 769-unit Jamba Juice chain is spinning like its fleet of fruit-pulping blenders. Jamba's same-store sales have climbed for five consecutive quarters, and it posted back-to-back profitable quarters during last year's spring and summer seasons. That hasn't happened in years.
Analysts are expecting a small deficit when Jamba reports after today's market close, and that's fine. This is a seasonal business. Chilly and nutrient-boosted fruit drinks are better sellers as temperatures heat up. However, losses should continue to narrow during the off-season as the company hands over more of its company-owned stores to proven franchisees.
MAKO is the company behind the RIO robotic arm platform for orthopedic procedures and RESTORIS implants used in its patented MAKOplasty procedures. Squeamish investors may turn away at the sight of red ink, but this is a cutting-edge company that's updating the orthopedic market in an undeniably positive way.
Profitability may be two years away for MAKO at this point, but the top-line growth is undeniable. Wall Street's banking on an 82% pop in the top line, and the deficits should continue to shrink at this point.
Cisco is the networking giant. The tech bellwether's routers and switches connect corporate networks. Cisco has struggled on the consumer side. Competition has been fierce on the enterprise side. However, the pros see Cisco's earnings moving in the right direction these days.
SodaStream is the Israeli company behind the popular namesake beverage maker. SodaStream's simple yet patent-protected appliance turns tap water into carbonated soda. The knee-jerk reaction when the company went public toward the end of 2010 was to dismiss the company as a novelty, but SodaStream has been a hit in overseas markets for years.
SodaStream has blown past Wall Street's bottom-line targets in each of its first four quarters as a public company. We'll find out on Wednesday if it's able to stretch that streak to five.
Universal Display is a pioneer in organic light-emitting diode technologies. The efficient lighting source is starting to gain traction in televisions, monitors, and even smartphones. Rich in OLED patents, Universal Display has been striking lucrative deals for its technology.
Universal Display was losing money for years until it surprised the market with its first quarterly profit six months ago. The black ink continues, and this should be the company's third consecutive quarter of profitability.
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.