7 Reasons Not to Worry This Week

Last week proved to be a mixed start to earnings season, and the ups and downs are likely to continue.

I recently singled out seven stocks that are projected to post lower earnings this week than they did a year earlier -- but that's just one side of the story.

Thankfully, there's more good news than bad news on the earnings front. Between recessionary cost-cutting and general improvement from last year's depressed levels, several companies are in better shape now than they were a year ago.

Let's go over seven companies that analysts see posting healthier bottom lines this week.

Source: Yahoo Finance.

Clearing the table
Let's start at the top. IBM has come a long way since all it made was international business machines. The tech bellwether is a meaty player in corporate IT services, with the healthier margins to prove it. Investors also shouldn't be surprised if IBM lands ahead of the $2.58-a-share profit that Wall Street is targeting, since the big blue chip has topped expectations every quarter over the past three years. We'll see if the streak lives on after today's market close.

Apple is another company that has consistently surpassed analyst guesstimates. This quarter should be another winner, as it happens to coincide with the introduction of the iPad and iPhone 4 -- each clearing millions in their much-anticipated debuts.

PepsiCo is the pop star with the famous beverages to wash down its Frito-Lay salty snacks. Supermarket staples with marquee brands haven't been as steady during the recession as one would think. Penny-pinching shoppers can always turn to cheaper store-specific soda or generic potato chips. In PepsiCo's defense, it has posted a dip in year-over-year profitability just once during the economic downturn. PepsiCo would prefer to save the dips for its chips.

With 14 million subscribers and counting, Netflix has gone from the DVD graveyard to a digital rebirth. The ability to rent optical discs and access unlimited streams for a set price have been just the ticket for a nation of couch potatoes.

AT&T may be a surprising name to find here, especially given all of the flak that Ma Bell gets over its wireless coverage. As it turns out, a healthy combination of iPhones and U-verse television programming has been more than enough to offset both its scarred image and the perpetual fade of hardwired telco customers.

Chipotle Mexican Grill has managed to keep its comps growing during the economic downturn, and that isn't really a surprise to its growing legion of rabid fans. The quick-service burrito roller's "food with integrity" mantra is resonating with the hungry, despite the presence of dollar-menu-flinging burger chains down the street.

Microsoft is riding high since last year's introduction of Windows 7, and now it's time to see how recent rollouts -- Office 2010 and the brand new Xbox model with its motion-based controller -- are faring. Analysts see dramatic improvement on Mr. Softy's bottom line, with the world's largest software company earning $0.46 a share after posting net income of $0.36 a share a year earlier.

Cross those fingers, but know the fundamentals
These aren't the only companies expected to post year-over-year gains this week. Several companies have either found ways to grow during the recession or have simply cut enough corners to show improvement on the bottom line.

This doesn't mean that investors can rest easy. The bad news here is that these companies are expected to post improving results. The optimism is already baked into their share prices. It makes it easier for them to slip, but why begin worrying about the companies that we aren't supposed to be worrying about?

If analysts are doing a good job modeling their profit targets, we'll be just fine.

Which of the many earnings report due out this week are you looking forward to? Share your enthusiasm in the comment box below.