Now that the Federal Reserve has bumped up the discount rate, proof of the economy's gradual recovery is going beyond simply anecdotal. If the Feds are tweaking its emergency lending rate, it may be time to break out the party hats (and possibly finalize that mortgage refi before monetary policy catches up).

There is still a problem in this Bollywood dance number. We still have several companies that aren't even close to turning the corner. There are plenty of stocks where the bottom line is still going the wrong way.

Let's go over a few of the blue chips and seemingly recession-proof companies where analysts see the arrows pointing down on the bottom line next week. Some of the names may surprise you.


Latest Quarter EPS (Estimated)

Year-Ago Quarter EPS

American Tower (NYSE:AMT)



Dendreon (NASDAQ:DNDN)



DreamWorks Animation (NYSE:DWA)



Home Depot (NYSE:HD)





H.J. Heinz (NYSE:HNZ)



Safeway (NYSE:SWY)



Source: Yahoo! Finance.

Clearing the table
There will be several companies posting lower earnings next week, but these are just a few of the names that really jump out at me.

Let's start with American Tower. It erects wireless towers, which it then leases to the major carriers. It's an important part of the industry's infrastructure, and it obviously isn't hurting that leading carriers are attacking one another in televised ads that brag about coverage. American Tower generates more revenue per tower than its largest competitors, a testament to the company's strategic planning. This should be a time for explosive growth, yet analysts see a small dip in year-over-year profitability.

Dendreon is a profitless biotech -- and one with widening deficits at that. It is still popular around Fooldom, since its Provenge drug for the treatment of prostate cancer could be a blockbuster if it secures FDA approval. Investors obviously aren't buying in these days based on the Dendreon's financial past, though it would be nice if it could ease up on the bleeding.

DreamWorks Animation is in a lull when it comes to hot theatrical and DVD releases. The computer animation studio's fortunes should change once Shrek Forever After comes out in three months. The popularity of premium-priced 3-D releases are boosting ticket prices -- and DreamWorks Animation is all over that trend in its upcoming releases -- but the good news on the multiplex front is hosed down by the industry's fading DVD sales.  

Home Depot is still a work in progress. One would expect home improvement chains to turn higher before the general housing industry. Between the low interest rate environment and homeowners making cost-effective moves for renovations and additions to their existing homes rather than simply moving, this should be a good time for Home Depot. The flipside to this is that consumers are still leery of big-ticket items. There are also several homes with larger mortgages than what the properties are truly worth, so those homeowners are unlikely to invest in a property that may be either foreclosed upon or abandoned. was one of China's earliest leaders in the booming online gaming market. The country's youth are still drawn to the multiplayer experiences, where hundreds of thousands of gamers may be playing the same game at the same time. NetEase was dinged last year when its licensed World of Warcraft game was delayed in China, but the company's flagship titles should be doing more than enough to keep growth going.

Heinz is another company that has yet to "ketchup" with the market. Food stocks were once seen as recession-resistant plays, but the prolonged economic funk finds shoppers trading down to lower-priced store brands. A step down won't come as a shock to Heinz investors. The company has posted year-over-year declines in net income in each of the three previous quarters.  

Finally, we have Safeway. This one may come as a shock. Whether supermarket shoppers buy the big brands or settle for cheaper knockoffs, the grocery store operators are there to check out all buyers. Unfortunately for Safeway investors, analysts see quarterly earnings sliding 33% next week.

Why the long face, short seller?
These reports aren't likely to be pretty. Many of these stocks are in seemingly healthy sectors, to boot. An online gaming company in China going in reverse? A supermarket giant that isn't ringing up record profits? This isn't going to be a pretty quarter, no matter how jaw-dropping it can be rendered by DreamWorks Animation's high-tech animators.

There is a silver lining, though. Investors are already braced for the worst with these reports. If there is an upside to this grim list, it's that lower profitability is already baked into next week's reports. It actually opens the door for unexpected surprises.

The more I think about it, the less worried I become.

Home Depot is a Motley Fool Inside Value pick. American Tower and are Motley Fool Rule Breakers selections. DreamWorks Animation is a Motley Fool Stock Advisor recommendation. HJ Heinz is a Motley Fool Income Investor selection. Try any of our Foolish newsletter services, free for 30 days.

Longtime Fool contributor Rick Munarriz wonders if his contrarian heart will ever be happy. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.