5 Reasons Not to Worry About Next Year
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December 24, 2012 | Comments (1)
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 next year. Thankfully, they're the exceptions and not the rule. Despite the many economic uncertainties, Wall Street sees most companies building on their 2012 profitability.
Let's go over some publicly traded companies that are expected to stand tall next year by posting year-over-year improvement on the bottom line.
|
Company |
Next Year EPS (estimated) |
This Year EPS |
My Watchlist |
|---|---|---|---|
|
Amarin ( NASDAQ: AMRN ) |
($0.73) |
($1.48) |
|
|
Molycorp ( NYSE: MCP ) |
$0.17 |
$0.02 |
|
|
Alcatel-Lucent ( NYSE: ALU ) |
($0.18) |
($0.08) |
|
|
3D Systems ( NYSE: DDD ) |
$1.57 |
$1.23 |
|
|
Peregrine Pharmaceuticals ( NASDAQ: PPHM ) |
($0.29) |
($0.31) |
Source: Thomson Reuters.
Clearing the table
Let's start at the top with Amarin.
Investors have been rallying behind drugmakers in the battle against the bulge and diet-related risks, and the prospects are bright for Amarin's triglyceride-lowering drug, Vascepa.
Shares of Amarin have come under fire since announcing plans to take on $100 million in debt to finance its own sales force to market Vascepa. The market has historically warmed up to big pharma partners stepping up for this stage of a drug's marketing, partly because it often results in an eventual buyout.
Amarin will still burn through money in 2013, but analysts see the volatile company shaving its deficit roughly in half in the year ahead.
Molycorp is a fallen darling. It was hailed as a growth stock when it went public two years ago, championing the rare earth elements craze. Things haven't been easy these days, and the stock took a hit last week when its CEO surprisingly left the company. It doesn't help that the SEC is investigating the company's earlier financials.
Analysts see Molycorp barely breaking even in 2012, but they do see profitability improving to $0.17 a share in 2013. Yes, this is 90% less than the $1.70 a share that the company rang up in 2011, but it's all about taking baby steps in the right direction.
Alcatel-Lucent shares have rallied more than 50% since bottoming out two months ago. The provider of networking and communications equipment got a new lease on life earlier this year, raising $2.12 billion in new debt financing that will help it push out its current maturities a few year. That should be enough time to give the Paris-based company's home turf of Europe -- and the rest of the world, really -- time to improve to the point of ordering more telecommunications gear again.
3-D printing is a niche that David Gardner's been excited about for some time, and now the rest of the investing world is starting to take notice. 3D Systems has been a big winner along the way, more than tripling in 2012 alone.
The ability to print out physical products -- from smartphone cases to Lego replacement pieces -- is something that will become a reality to more people as the price of these high-tech printers gets cheaper and they become easier to use and program. 3D Systems is leading the way, and the healthy earnings growth and even more robust recent capital appreciation bears that out.
Finally we have Peregrine Pharmaceuticals. The biotech is working on a promising treatment for non-small-cell lung cancer that will pay off big for investors if things pan out. Yes, Peregrine is losing money, but it's been losing less of it with every passing period.
The past few quarters have been encouraging, especially as Peregrine has clocked in with losses that are narrower than what the pros have been targeting. As I recently pointed out , Peregrine bested bottom-line estimates by 23%, 36%, and 33% in its past three quarters, respectively.
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.
2013 and beyond
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Intuitive;
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