5 Reasons Not to Worry This Week

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

Last week's run to a new Dow Jones Industrial Average high and the encouraging drop of the unemployment rate to its lowest level in more than four years are welcome signs.

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

Diamond Foods (NASDAQ: DMND  )

$0.06

$0.01

Peregrine Pharmaceuticals (NASDAQ: PPHM  )

($0.07)

($0.13)

TICC Capital (NASDAQ: TICC  )

$0.27

$0.26

Delcath Systems (NASDAQ: DCTH  )

($0.16)

($0.32)

Ebix (NASDAQ: EBIX  )

$0.45

$0.44

Source: Thomson Reuters.

Clearing the table
Let's start at the top with Diamond Foods.

The snack giant is trying to get beyond an embarrassing couple of years. An accounting scandal and a botched attempt to acquire the Pringles line of potato chips smacked Diamond's credibility, but the company that got its start 100 years ago when a collective of California walnut growers banded together is crawling its way back to credibility.

Diamond -- whose brands include Emerald nuts, Pop Secret microwaveable popcorn, and Kettle potato chips -- is still a work in progress. Analysts see revenue and earnings declining this fiscal year that ends in July. However, analysts still see bottom-line improvement this quarter, overcoming an expected 9% decline in revenue.

Peregrine is a fledgling and for now profitless biotech researching monoclonal antibodies for the treatment and diagnosis of cancer.

Investors aren't buying into Peregrine for today's financial results, and that's a good thing. Peregrine is years away from profitability and meaningful revenue. The market will have to wait until its potentially promising treatments gain regulatory clearance to truly pay off. However, for now the important takeaway is that Peregrine's deficits are getting narrower.

You have to start somewhere.

TICC Capital is one of the many high-yielding business development companies out there, investing in bank loans, debt, and equity tranches of small- and mid-sized companies. TICC then passes on the bulk of its proceeds to its investors in the form of dividends.

TICC Capital completed a secondary offering last month. Secondary offerings may be dilutive to investors, but TICC will put the new money to work earning more high yields off of cash flow positive companies.

Delcath Systems is trying to cash in on its drug/device combination product -- the Delcath Hepatic Delivery System -- for applications in oncology. Delcatch is initially focusing on treating primary and metastatic liver cancers.

Delcath is still early in its revenue-generating cycle. Analysts see it generating just $6.6 million in revenue this year, but that's a major step up from 2012 where it likely raked in less than $0.5 million. We'll know for sure on Wednesday when it reports. The key takeaway here is that Delcath is expected to lose half as much on a per-share basis as it did in Wednesday's report than it did during the same quarter a year earlier.

Finally, we have Ebix.

The provider of enterprise software solutions for the insurance industry recently came under fire for its accounting practices. Ebix has been here before, and the stock bounced back after refuting the latest claims that Ebix is engaged in aggressive and questionable accounting practices.

Ebix will get another chance to defend itself on Thursday when it reports what Wall Street expects to be marginally improved bottom-line results.

Wall Street sees Ebix earning $0.45 a share in Thursday's report, narrowly besting the $0.44 a share it rang up a year earlier. The good news for investors is that Ebix has an impressive streak of beating profit projections in each of the 12 previous quarters.

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.

Keep thinking ahead
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.


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  • Report this Comment On March 11, 2013, at 5:29 PM, BSDetector wrote:

    Rick

    I loved it when you played the part of the nerdy accountant in Ghostbusters. Your new comedy role as:

    The Stock Analyst

    may very well be your funniest role ever though. You are so far off base with regard to your PPHM prediction it's hilarious. Keep us laughing dude; glad to see you're back on the comedy circuit.

    Owner since 0.80

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