7 Reasons Not to Worry This Week

Federal Reserve Chairman Ben Bernanke wants emerging markets to know that inflation in their bubbling economies isn't the fault of the questionable monetary policies of Western central banks.

He's probably also trying to get them to believe that QE2 is merely a classic cruise liner.

We live in simmering times, and not just because the world has become the mother of all melting pots.

Some companies are also blowing it during this so-called recovery. I singled out seven companies over the weekend that are projected to post lower earnings this week than they did a year earlier. Thankfully, that's just one side of the story.

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: Thomson Reuters.

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

Unlike the cable giants, which have been shedding video subscribers in recent quarters, DIRECTV is still harvesting a growing crop of couch potatoes. The country's leading satellite television provider had 18.9 million subscribers in North America through the end of September, 493,000 more homes than it was servicing a year earlier. DIRECTV's operations in Latin America are growing even faster; it presently has 5.4 million subscribers there. Consumers may be cutting the cord, but they're not smashing satellite dishes.

Frontier provides telecom services in underserved rural markets. It's been recently making headlines as it tries to back out of the television market. The stock's nearly 8% yield has attracted plenty of income investors. Going by the explosive top- and bottom-line growth that analysts are targeting for Wednesday's report, those same dividend chasers may soon be rubbing elbows with growth investors.

Travel portal priceline.com is known for its edgy William Shatner ads. Bulls have historically been the ones naming their own price here. The company routinely shatters Wall Street's profit targets. The pros are looking for earnings to spike 56% higher to $3.10 a share. It certainly seems aggressive, but Priceline's history has cleared even steeper hurdles than that.

IMAX provides the gargantuan screens currently breathing new life into theaters. Moviegoers aren't flinching at premium ticketing for enhanced cinematic experiences, and IMAX saw its box office gross roughly double.

IMAX's fourth quarter of 2009 should have been a hard act to follow. In mid-December of that period, Avatar redefined moviemaking. Thankfully, a busy slate of winners and a larger installed base of screens should find IMAX posting a dramatic surge in net income.

OmniVision Technologies makes camera chips found in both digital cameras and a growing array of wireless handsets. The stock took a hit last month when an analyst downgraded it, fearing that OmniVision's chip wouldn't remain the sole supplier for the next iPhone. It'll be months before we know whether he's right. In the meantime, OmniVision's profitability is pegged to pop nearly threefold in its latest quarter.

As the poster child of cloud computing, salesforce.com has been a Wall Street darling. Offering cheaper enterprise software solutions to companies has been an easy sell during the recession, and things are bound to get even better as companies ramp up their IT spending in an improving economy.

Finally, we have Smart Balance, the company behind the heart-healthy buttery spreads that bear its name. It's been able to exploit its lifestyle brand through popcorn, peanut butter, and even sour cream, but last year's national rollout of enhanced milk could have taken Smart Balance to the next level. It didn't, but at least the company's earnings should post year-over-year improvement when Smart Balance reports on Thursday.

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 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, making 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.