7 Reasons to Worry About Next Week

Despite the nearly incessant market rallies since mid-March, not
every company is living up to the market's enthusiastic rise. If
improving prospects elevate stock prices, why are so many companies'
shares headed in the opposite direction? Looking over the meager list
of companies slated to post their quarterly results at the other end of
this holiday weekend, you'll notice that most of the widely followed
equities are projected to announce lower net income year over year.

Let's go over a few of the companies whose quarterly date with Mr. Market may leave investors dismayed:

Source: Yahoo! Finance.

Clearing the table

There will likely be
many more companies posting lower earnings next week, but these are
just a few of the names that really jump out at me.

PriceSmart runs a chain of warehouse clubs throughout the Caribbean
and Central America. Isn't this a global recession? Aren't shoppers
seeking out bulk-sized bargains worldwide? Yes, and comps and sales
were up at PriceSmart for the month of May, as they have been for the
retailer's entire fiscal year. Unfortunately, analysts don't see
profitability moving in the same direction.

Alcoa, on the other hand, isn't supposed to be doing well. Aluminum demand is a slave to the economy. FBR Capital Markets downgraded the stock
earlier this week. However, Alcoa isn't just seeing a drop in profits.
All 16 major analysts tracking the company see red ink at Alcoa come
Wednesday.

International Speedway is a motorsports promoter -- the company
behind the Daytona 500. The economy is in a funk, but folks are still
splurging for affordable escapes like multiplex outings. International
Speedway, unfortunately, doesn't appear to be going along for the ride.

WD-40 is a surprising name. Recession or not, are you really going
to put up with a squeaky door? Beyond its signature all-purpose
lubricant, WD-40's other brands include Lava cleanser and 2000 Flushes
toilet deodorizer. This should be a recession-resistant company, but
clearly "the can with thousands of uses" can't restore growth to its
maker's bottom line.

Chevron's a petroleum giant. Prices at the pump have been inching
higher heading into the summer travel season, but that's not improving
Chevron's prospects for its latest quarter, apparently.

3Com is no longer the tech bellwether it once was. Wall Street sees
a fiscal fourth-quarter profit of barely half what 3Com brought home
last year. Investors may want to take heart here, though. Analysts also
figured that 3Com was only good for a nickel a year ago, too.

Shaw is a Fortune 500 conglomerate. Cost overruns at a coal plant stung the engineering and construction heavyweight three months ago. The prognosis doesn't look good as we barrel toward next week's quarterly numbers.

Why the long face, short-seller?

If
these sound like seven sob stories, they're largely indicative of the
many companies with shrinking bottom lines. The upside for investors
here is that Wall Street is realistic. It's expecting bad news. The
real surprise here would be healthy reports.

That's not an entirely impossible feat, and it wouldn't take much of
a positive surprise for some of the companies like PriceSmart or Shaw
to post year-over-year improvement next week. 3Com has blown past Wall
Street's profit targets for seven consecutive quarters.

The more I think about it, the less worried I become.

Copyright 2009 by United Press International