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5 Reasons Not to Worry This Week

By Rick Munarriz - Apr 15, 2013 at 9:09AM

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These five companies are moving in the right direction on the bottom line.

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

The Dow and S&P 500 both hit new highs last week as investors shrugged off uninspiring global economic news to push the leading market gauges higher.

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

Consumer Portfolio Services (CPSS -0.79%)

$0.11

$0.02

Joe's Jeans (NASDAQ: JOEZ)

$0.02

$0.00

SanDisk (NASDAQ: SNDK)

$0.77

$0.63

Intuitive Surgical (ISRG 1.16%)

$3.99

$3.50

Chipotle Mexican Grill (CMG -0.33%)

$2.14

$1.97

Source: Thomson Reuters.

Clearing the table
Let's start at the top with Consumer Portfolio Services. Shares of the auto loan financier took a hit two weeks ago after a Reuters article cast the subprime auto loan industry in an unflattering light. Consumer Portfolio Services takes on a lot of risky loans from car buyers that would get turned down from traditional financing providers.

The good news for investors is that the risks are apparently paying off these days. Wall Street sees a dramatic spike in profitability.

Joe's Jeans puts out premium denim. Who has the money to buy a $575 denim jacket or a $210 pair of pre-shredded vintage jeans? Well, a lot of people are apparently having no problem with Joe's high prices.

Net sales soared 33% during the company's holiday quarter, fueled by a 6% increase in same-store sales, retail expansion, and a robust 37% spike in wholesale net sales. There's little to reason to expect the trend to reverse. Despite its tiny share price, Joe's Jeans has been consistently profitable since late 2006.

SanDisk is the global leader in flash memory. The popularity of flash storage is undeniable. The trend toward flash that gained momentum with digital cameras and netbooks a few years ago has exploded in this age of tablets and smartphones. Things haven't always been easy for SanDisk, especially at times when competitors break into cutthroat pricing battles. The climate is kinder these days. Wall Street sees a 22% pop in net income this quarter.

Intuitive Surgical is the company behind the da Vinci surgical system that's been a popular addition at state-of-the-art hospitals. The robotic surgical arm is approved for a growing number of procedures. The shares took a hit earlier this year on reports that the FDA was probing instances at key hospitals where adverse incident reports were high for procedures involving Intuitive Surgical's platform. A strong report would silence the skeptics.

Finally, we have Chipotle. The burrito roller still doesn't have a problem attracting long lines to its growing chain of fast-casual restaurants, but the "food with integrity" company has been coming up short on the bottom line lately. After consistent market-thumping results after being spun off by Mickey D's, Chipotle has posted lower-than-expected earnings in back-to-back quarters.

The stock has fallen over the past year. Chipotle's trading 23% lower than it was when it peaked last April. It will be a defining moment when Chipotle reports on Thursday. If it wants to bring back growth investors and justify its still-lofty market premium, it's going to have to make sure that it gets back to besting the pros.

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.

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Stocks Mentioned

Chipotle Mexican Grill, Inc. Stock Quote
Chipotle Mexican Grill, Inc.
CMG
$1,289.79 (-0.33%) $-4.32
Intuitive Surgical, Inc. Stock Quote
Intuitive Surgical, Inc.
ISRG
$221.61 (1.16%) $2.54
Consumer Portfolio Services, Inc. Stock Quote
Consumer Portfolio Services, Inc.
CPSS
$12.60 (-0.79%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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