5 Reasons Not to Worry This Week

By Rick Aristotle Munarriz | More Articles | Save For Later
December 10, 2012 | Comments (0)

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

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 Peregrine Pharmaceuticals.

Peregrine reports this afternoon, shortly after the market close. It will host its conference call 30 minutes after the closing bell.

A lot is riding on Peregrine's potentially promising treatment for non-small-cell lung cancer, and it was dealt a blow in September when the biotech reported that the originally inspiring clinical trial data was not handled properly and is therefore inaccurate. The shares have bounced back to make back some of the sharp decline, and hopefully this afternoon's report will shed some more light on the drug candidate's prospects.

Dollar General runs a thrift store chain with its "Save time. Save money. Every day!" slogan that promises deep savings on nondurable consumer goods. There are 10,371 store locations across the country, making it the largest discount retailer in the country (in terms of store count).

As you can probably imagine, helping shoppers squeeze as much value out of their money as possible is a potent message in good and bad times. Wall Street sees the deep discounter growing its profitability 20% to $0.60 a share when it reports tomorrow.

Costco is the top dog when it comes to warehouse clubs. Shoppers pay annual dues that grant them access to warehouse racks of bulk-sized goods at low prices.

It works. Costco raised its annual rates by 10% late last year and consumers didn't flinch.

Costco is one of the growing number of companies that have declared beefy one-time distributions to go out later this month, ahead of the likely dramatic spike in the tax rate on qualified dividends. However, Costco took the unconventional move of taking on $3.5 billion in new debt to pay for the $3 billion that it will return to its stakeholders this month.

The large-box retailer should be good for the money. Despite selling things at meager markups, healthy inventory turnover and low club-level overhead result in a healthy bottom line.

Hovnanian Enterprises is a homebuilder relishing the market's turnaround.

Things got scary for Hovnanian. From late 2006 until earlier this year, the real estate developer posted chunky deficits in all but one standout quarter. Firming housing prices are wooing renters in as buyers, and mortgage rates near historic lows are making it easier to get approved for new purchases.

Analysts see Hovnanian posting another quarterly loss when it reports on Thursday, but it's expected to be a sharply smaller deficit than it posted a year earlier.

Finally, we have VeriFone Systems. The provider of electronic payment solutions is a staple at many retailers. The next time you're swiping a credit or debit card, see if the machine has the VeriFone name. The company also provides retailers with enterprise solutions behind the scenes.

VeriFone has a pretty impressive streak of besting the pros. It has landed ahead of Wall Street's profit target in each of the past 11 quarters. These same analysts are calling for earnings to climb 43% to $0.76 a share when VeriFone reports on Thursday. If the past nearly three years of beats are any indicator, expect VeriFone to earn even more than that.

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.

If you like following winners -- and you probably do since you're reading this article -- you might want to learn more about Costco. The retailer's  low prices haven't just benefited customers — shareholders have walloped the market, returning 11,000% over the past two decades. However, with prices near all-time highs, is the ride over for Costco investors? To answer that, we've compiled a premium research report with in-depth analysis on whether Costco is a buy right now, and why. Simply click here now to gain instant access to this valuable investor's resource.

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