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.

The major market indexes rose sharply last week, and investors are starting to realize that this earnings season may not be so bad after all.

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.

Source: Thomson Reuters.

Clearing the table
Let's start at the top with American Capital. Business development companies -- or BDCs -- have become popular for investors seeking healthy yields in this climate of low interest rates. BDCs provide small and medium-size companies that don't typically qualify for conventional commercial bank financing with capital at compelling rates. BDCs then return the lion's share of the payments to investors.

American Capital has a unique structure. It doesn't pay out dividends when it's trading at a discount to its net asset value, choosing instead to return money to its stakeholders by buying back its shares outstanding. It's a move that has resulted in American Capital retiring nearly 18% of its shares outstanding since the third quarter of 2011.

Analysts see healthy improvement on the bottom line, and that will likely result in more ammo to repurchase shares.

3D Systems was one of last year's hottest stocks, soaring 271% as investors warmed up to the potential of 3-D printing. Mr. Market's reality check sent the stock lower earlier this year, but 3D Systems has made back most of those declines to be trading only 3% lower in 2013.

The long-term promise of 3-D printing is real. The applications of printing physical objects are revolutionary. However, 3D Systems is already starting to benefit from the early adopters. Wall Street sees revenue and earnings per share climbing 30% and 24% when it reports quarterly results tomorrow.

Sirius XM is another company projected to show bottom-line growth tomorrow.

The only game in town when it comes to satellite radio has made the most of the successful merger between Sirius and XM four years ago. Sirius XM is now consistently profitable, and it's hard to argue with the record 23.9 million subscribers that it had on its rolls when the year began. With car sales strong and consumers not flinching when it comes to premium entertainment subscription services, Sirius XM should have another strong showing tomorrow morning.

LeapFrog Enterprises raised the bar on electronic learning toys when it introduced its namesake product line that helps young children improve their reading and math skills. LeapFrog has evolved, putting out the popular Leapster portable system and the recently successful LeapPad learning tablet.

As one can imagine, LeapFrog's strongest quarters come during the latter half of the year, when merchants load up on its gadgetry ahead of the holiday shopping season. Red ink this time of the year is natural for LeapFrog, but analysts see the company losing half as much as it did a year earlier.

Finally, we have ZAGG. ZAGG's first big break came when it introduced its invisibleSHIELD protective film for smartphones and tablets. ZAGG's product line has expanded to included keyboard covers and audio accessories.

ZAGG is a popular stock to bet against. There were more than 8 million shares sold short as of mid-April, and that's a pretty big deal for a stock where the average daily volume lately has been less than 400,000 shares. Analysts see double-digit revenue and earnings growth, and bulls will naturally be hoping that a strong showing out of ZAGG will trigger a short rally.

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.