5 Reasons Not to Worry About Next Year

It's not a perfect world out there for investors, but things may be starting to get better.

I recently went over some of the companies that are expected to post lower quarterly profits next year. Thankfully, they're the exceptions and not the rule. Despite the many economic uncertainties, Wall Street sees most companies building on their 2012 profitability.

Let's go over some publicly traded companies that are expected to stand tall next year by posting year-over-year improvement on the bottom line.

Company

Next Year EPS (estimated)

This Year EPS

My

Watchlist

Amarin (NASDAQ: AMRN  )

($0.73)

($1.48)

Add

Molycorp (NYSE: MCP  )

$0.17

$0.02

Add

Alcatel-Lucent (NYSE: ALU  )

($0.18)

($0.08)

Add

3D Systems (NYSE: DDD  )

$1.57

$1.23

Add

Peregrine Pharmaceuticals (NASDAQ: PPHM  )

($0.29)

($0.31)

Add

Source: Thomson Reuters.

Clearing the table
Let's start at the top with Amarin.

Investors have been rallying behind drugmakers in the battle against the bulge and diet-related risks, and the prospects are bright for Amarin's triglyceride-lowering drug, Vascepa.

Shares of Amarin have come under fire since announcing plans to take on $100 million in debt to finance its own sales force to market Vascepa. The market has historically warmed up to big pharma partners stepping up for this stage of a drug's marketing, partly because it often results in an eventual buyout.

Amarin will still burn through money in 2013, but analysts see the volatile company shaving its deficit roughly in half in the year ahead.

Molycorp is a fallen darling. It was hailed as a growth stock when it went public two years ago, championing the rare earth elements craze. Things haven't been easy these days, and the stock took a hit last week when its CEO surprisingly left the company. It doesn't help that the SEC is investigating the company's earlier financials.

Analysts see Molycorp barely breaking even in 2012, but they do see profitability improving to $0.17 a share in 2013. Yes, this is 90% less than the $1.70 a share that the company rang up in 2011, but it's all about taking baby steps in the right direction.

Alcatel-Lucent shares have rallied more than 50% since bottoming out two months ago. The provider of networking and communications equipment got a new lease on life earlier this year, raising $2.12 billion in new debt financing that will help it push out its current maturities a few year. That should be enough time to give the Paris-based company's home turf of Europe -- and the rest of the world, really -- time to improve to the point of ordering more telecommunications gear again.

3-D printing is a niche that David Gardner's been excited about for some time, and now the rest of the investing world is starting to take notice. 3D Systems has been a big winner along the way, more than tripling in 2012 alone.

The ability to print out physical products -- from smartphone cases to Lego replacement pieces -- is something that will become a reality to more people as the price of these high-tech printers gets cheaper and they become easier to use and program. 3D Systems is leading the way, and the healthy earnings growth and even more robust recent capital appreciation bears that out.

Finally we have Peregrine Pharmaceuticals. The biotech is working on a promising treatment for non-small-cell lung cancer that will pay off big for investors if things pan out. Yes, Peregrine is losing money, but it's been losing less of it with every passing period.

The past few quarters have been encouraging, especially as Peregrine has clocked in with losses that are narrower than what the pros have been targeting. As I recently pointed out, Peregrine bested bottom-line estimates by 23%, 36%, and 33% in its past three quarters, respectively.

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.

2013 and beyond
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (2) | Recommend This Article (6)

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 December 24, 2012, at 11:38 AM, EnigmaDude wrote:

    Maybe its just a typo but Alcatel Lucent does not look like it will see improved earnings next year.

  • Report this Comment On December 25, 2012, at 12:28 PM, TMFBreakerRick wrote:

    Enigma, good catch. The years are flipped around in the table. It's an $0.18 a share loss in 2012 and just $0.08 a share deficit in 2013. Thanks.

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: 2168117, ~/Articles/ArticleHandler.aspx, 10/2/2014 12:33:45 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...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement