It's not a perfect world out there for investors.
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)
|PriceSmart (Nasdaq: PSMT )||$0.60||$0.55||Add|
|Helen of Troy (Nasdaq: HELE )||$0.86||$0.78||Add|
|Fastenal (Nasdaq: FAST )||$0.37||$0.32||Add|
|PDL BioPharma (Nasdaq: PDLI )||$0.46||$0.39||Add|
|Wells Fargo (NYSE: WFC )||$0.81||$0.70||Add|
Source: Thomson Reuters.
Clearing the table
Let's start at the top with PriceSmart.
The company operates a chain of warehouse clubs throughout Latin America and the Caribbean. The warehouse-club concept is popular south of the U.S., though there are a few tweaks. PriceSmart stores may copy the same bare-bones style that stateside warehouse clubs use to keep costs low, but these stores are a bit smaller. The average annual membership of $35 at PriceSmart is also less than what U.S. bulk shoppers pay.
There's growth happening here. Analysts see PriceSmart's revenue soaring 18% in its latest quarter. Profitability is only expected to grow half as quickly, but at least it's moving the right direction.
The one thing to be aware of when PriceSmart reports after today's market close is that the company has come up short in each of the past three quarters. It's not a pretty trend.
Helen of Troy makes beauty products. This would seem to be a pretty recession-resistant industry, but it's funny how long a hairbrush can last with missing bristles when money's tight. Thankfully, Helen of Troy makes the cut this week as yet another bottom-line grower.
Fastenal's specialty is nuts and bolts, though it makes other industrial fasteners and products. Wall Street's banking on a profit of $0.37 a share, comfortably ahead of the $0.32 a share it earned a year earlier.
PDL BioPharma may sound like another biotech upstart, but the company happens to be very profitable. It also shells out a meaty dividend, given its healthy cash flows. PDL BioPharma's yield of 8.9% puts even the higher-paying big pharmas to shame.
Finally, we have growth from Wells Fargo as well. The banking giant reports on Friday, kicking off the wave of earnings reports from the "too big to fail" financial-services behemoths.
Things should go well for the company, which has been a serial acquirer of smaller, regional banks in the past. Analysts are holding out for a profit of $0.81 a share. Wells Fargo posted net income of $0.70 a share last year.
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.