The majority of companies have just reported their earnings, but shortly after July 4, we'll start the whole cycle up again. No doubt, some of these companies will have surprises up their sleeves, and certain sectors, such as retail, will receive a great deal of scrutiny as investors try to determine whether the consumer is still alive and well.
Looking at my own portfolio and watch list, I don't see many companies that I expect will provide large surprises or especially material information. However, I am a little curious to see the results of a handful of companies, and I'm very curious to hear more details about these companies' strategies and outlook.
Electronic Arts (NASDAQ:ERTS) and Activision (NASDAQ:ATVI)
These two video game makers are both looking somewhat cheap, and the valuations are intriguing. Both have a number of attractive franchises and, during the boom portion of the industry cycle, are extremely profitable. Right now, however, is not the boom portion of the cycle, but rather the trough. The question in my mind is how long the trough will last and how great the next boom will be.
Don't let the P/E ratio fool you here, as these companies are cyclical, and such companies are generally more interesting when the P/E ratio is high. The valuations here are compelling, but using the last peak year of free cash flow, I still see a fair amount of growth priced in. What these companies have to say about the migration to next generation consoles from Sony (NYSE:SNE) and Motley Fool Inside Value selection Microsoft (NASDAQ:MSFT) will give some hints as to how strong the market should be.
U-Store-It Trust (NYSE:YSI)
This company is a storage REIT. The business itself is not all that flashy and somewhat predictable. The company has badly unperformed its own targets and its peers, but the company's new CEO and CFO tandem of Dean Jernigan and Christopher Marr are well-known and respected in the industry from the last time they worked together at another storage REIT, Storage USA. Storage USA was founded, taken public by Jernigan, and acquired by General Electric (NYSE:GE) in 2002.
Assuming that Jernigan and Marr can right the ship, the shares are attractively priced and also yield close to 6.5%. This one is interesting to watch, because there's still a question in my mind as to how much freedom Jernigan and Marr will have to run U-Store-It and make operational decisions. The Amsdell family, which started the company, still has sizeable ownership stakes, as well as positions on the board and in management.
Canon (NYSE:CAJ)
Shares of this imaging company have been on a bumpy ride of late. I'm curious to see the results from Canon, because the company relies on significant global sales and is moving toward greater global manufacturing capabilities. Canon's earnings report will be of interest, because the company's geographic diversity provides some insight into business and consumer spending. Since its last earnings release, the company raised guidance for the remainder of the year, so there's reason to be optimistic even if there are recent signs of cracks in the world economy. Canon also provides a paragraph or two of insight into how the domestic Japanese economy is doing in its earnings releases and is one I like to check in on for that reason.
Microsoft
This behemoth is of interest because of the dive the shares have taken since the company announced it will increase capital expenditures in the near term to grow its business for the long term. I have to admit that I wasn't thrilled with the idea initially, but I think the market's short-term reaction, in contrast to the long-term implications of the financial health of the company, is an overreaction. An upcoming analyst day and the next quarter's earnings release will hopefully provide additional details that the company wasn't willing to discuss on its last conference call.
Foolish final thoughts
There are, of course, other companies I'm interested in hearing updated information from as well. But these five companies all trade at valuations that deserve some attention and have business, industry, or broad economic factors that I think are worth paying attention to this quarter, because of the potential near-term impact on their valuations.
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Nathan Parmelee owns shares of Microsoft and Canon but has no financial stake in any of the other companies mentioned. You can view his profile here . Electronic Arts and Activision are Stock Advisor recommendations. The Motley Fool has an ironcladdisclosure policy.
