5 Reasons Not to Worry This Week

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.

Company

Latest-Quarter EPS (estimated)

Year-Ago-Quarter EPS

My

Watchlist

Hain Celestial (Nasdaq: HAIN  ) $0.45 $0.35 Add
Pacific Sunwear (Nasdaq: PSUN  ) ($0.12) ($0.18) Add
Qihoo 360 (Nasdaq: QIHU  ) $0.17 $0.11 Add
Prospect Capital (Nasdaq: PSEC  ) $0.40 $0.31 Add
Salesforce.com (NYSE: CRM  ) $0.39 $0.30 Add

Source: Thomson Reuters.

Clearing the table
Let's start at the top with Hain Celestial.

The company distributes a wide line of natural foods. Organics are all the rage these days, and Hain Celestial is there with everything from soy milks to the popular Celestial Seasonings tea line. We've seen comps climbing at organic-supermarket chains for nearly two years, and Hain Celestial has been hopping along for the ride.

Throw in Hain Celestial's track record of making smart acquisitions of upstart natural-food companies it can expand to a broader audience, and you have a winning recipe that has seen Hain Celestial more than double off of last year's summertime lows.

PacSun is a company that lives for summer, but the retailer of swimwear and other sporty apparel has seen better days. PacSun's been trading in the single digits for more than four years. However, analysts do see the company posting a narrowing deficit this time around, so at least it's moving in the right direction.

Qihoo 360 is the company behind China's leading Internet browser. The company also provides a popular antivirus program. Qihoo 360 has routinely beaten analyst estimates, but investors are generally gun-shy when it comes to Chinese growth stocks that have been the subject of stateside short-seller attacks.

Prospect Capital turns heads for its 11% yield, but business development companies are not without their risks. Thankfully, earnings growth doesn't appear to be a problem with Prospect Capital, which is expected to earn more than enough in Wednesday's report to cover its next quarterly dividend.

Finally, we have salesforce.com moving higher. It isn't a surprise to see the cloud-computing darling growing. Offering companies a cost-effective alternative to traditional enterprise software has paid off with client gains and market-thumping returns. Wall Street's betting that earnings will soar 30% to $0.39 a share in Thursday's report.

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 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.

The Motley Fool owns shares of The Hain Celestial Group and salesforce.com. Motley Fool newsletter services have recommended buying shares of salesforce.com and The Hain Celestial Group. Motley Fool newsletter services have recommended shorting salesforce.com. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (4) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 20, 2012, at 10:15 AM, dj235 wrote:

    You have 5 companies listed. How many of these five companies are you reporting using non-GAAP numbers?

    It's a joke that salesforce.com has been reporting non-GAAP numbers for the last 6 to 8 quarters.

    How many shares did you use in your calculation? They have diluted the outstanding shares drastically over the last 7 years?

    How many times has salesforce.com achieved their forward PE? Zero! Never.

    How has earnings grown over the last 6 quarters? Oh they have decreased and decreasing at a faster pace.

    Why do so many people miss lead salesforce.com investors?

    Why would a company want to miss lead you?

    You would think strong companies would want to be open about what they are doing and how they are doing it. Not salesforce.com, they don't want you do know anything.

    salesforce.com is not a good investment.

    Might, just might make money trading the stock, but my guess is large intutions with their computers will take your money.

    Best position is short.

  • Report this Comment On August 20, 2012, at 4:19 PM, 1caflash wrote:

    Prospect Capital pays monthly dividends.

  • Report this Comment On August 20, 2012, at 4:22 PM, 1caflash wrote:

    Prospect Capital pays monthly dividends.

  • Report this Comment On August 20, 2012, at 8:09 PM, TMFBreakerRick wrote:

    crmDean, analyst expectations are based on the non-GAAP profit targets.

    I agree with you on the nature of non-GAAP vs. GAAP, but when comparing a stock's performance to analyst expecations you have to go with their terms.

    Rick

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1989308, ~/Articles/ArticleHandler.aspx, 8/30/2014 6:33:28 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 21 hours ago Sponsored by:
DOW 17,098.45 18.88 0.11%
S&P 500 2,003.37 6.63 0.33%
NASD 4,580.27 22.58 0.50%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/29/2014 4:03 PM
CRM $59.09 Up +0.80 +1.37%
Salesforce.com CAPS Rating: *
HAIN $98.36 Down -0.02 -0.02%
Hain Celestial CAPS Rating: *****
PSEC $10.31 Up +0.05 +0.49%
Prospect Capital C… CAPS Rating: ****
PSUN $2.08 Down -0.22 -9.57%
Pacific Sunwear CAPS Rating: **

Advertisement