Money Matters - Simplified

7 Reasons Not to Worry This Week


Who needs five trading days when the Mr. Market can do so much with only four?


Stocks raced higher during last week's abridged trading. Equities took off after the opening bell on Tuesday and didn't look back. The S&P 500 soared 5.4%, rising each and every single day.

It's fair, I guess. The same index had fallen during each of the five trading days during the previous week.

I may have played the killjoy over the weekend, singling out seven stocks that are projected to posts lower quarterly profits this week than they did a year ago. Thankfully, there will be far more companies improving their bottom lines this week than those going the wrong way.

Let's go over seven publicly traded companies that are expected to stand tall this week by posting year-over-year improvement on the bottom line.

Company

Latest Quarter's EPS
(Estimated)

Year-Ago Quarter's
EPS

Yum! Brands (NYSE: YUM)

$0.54

$0.50

Intel (Nasdaq: INTC)

$0.43

($0.07)

AMD (NYSE: AMD)

$0.07

($0.49)

Google (Nasdaq: GOOG)

$6.53

$5.36

JPMorgan Chase (NYSE: JPM)

$0.71

$0.28

General Electric (NYSE: GE)

$0.27

$0.26

Mattel (NYSE: MAT)

$0.15

$0.06

Source: Yahoo Finance.

Clearing the table
Let's start at the top with Yum! Brands, the parent company of fast-food giants Taco Bell, KFC, and Pizza Hut. Taco Bell has been recently raising the bar by lowering prices on its value meals. Have you seen the Charles Barkley ads pitching the $2 meal deals? The chain is pairing up a few of its more popular items with a soft drink and a bag of chips for just two bucks. Will the move hurt margins? Hopefully the company will discuss its strategy during tomorrow's report.

Intel and AMD are feisty rivals when it comes to computer chips. Intel has a history of cyclical swings. AMD was posting years of red ink, but it's now expected to post its third quarterly profit in a row. A global economic recovery should continue to bode well for demand of new computing products. Both companies may be able to coexist without sacrificing margins in that kind of climate.

Google is the world's leading search engine. Analysts see Big G's quarterly earnings climbing 22%. Was the company growing faster during its early days as a public company? Yes, but investors can also pick up Google for just 15 times next year's projected bottom line. A multiple in the teens during its gravy days would have been impossible.

JPMorgan Chase is one of the "too big to fail" banking giants. It dabbles in several facets of the financial services industry, from its JPMorgan investment banking, Chase credit cards, and various banking operations. The pros see a dramatic uptick in profitability at JPMorgan Chase, a welcome contrast to the year-over-year declines that seem likely at some of its beefy rivals.

GE is the iconic conglomerate with its fingers in everything from aviation to finance. Analysts tracking the behemoth are looking for net income of $0.27 a share. This is barely above the $0.26 a share it rang up a year ago, but it would be a monumental event if it happens. GE hasn't posted year-over-year improvement on the bottom line in more than two years.

Finally, we have toy maker Mattel putting another shrimp on the Barbie. Mattel refreshingly stunned Wall Street three months ago when it delivered an unexpected profit. Now analysts are hungry for more, projecting profits to more than double at the country's largest maker of playthings.

Cross those fingers, but know the fundamentals
Investors in these seven 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 seven stocks wouldn't have it any other way.

© 2010 UCLICK L.L.C