{"id":44314,"date":"2013-11-19T10:28:16","date_gmt":"2013-11-19T15:28:16","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=44314"},"modified":"2013-11-19T07:29:09","modified_gmt":"2013-11-19T12:29:09","slug":"three-strong-stocks-lean-times","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/11\/19\/three-strong-stocks-lean-times\/","title":{"rendered":"Three Strong Stocks for Lean Times"},"content":{"rendered":"

By John Whitefoot<\/a> for Daily Gains Letter<\/a><\/p>\n

\"Strong<\/a>On the surface, the S&P 500<\/a> third-quarter earnings season<\/a> is looking pretty good. The S&P 500 is up 25.4% year-to-date and is up 32% year-over-year. So far so good!<\/p>\n

By the end of the first week of November, of the 446 companies on the S&P 500 that reported third-quarter results, 73% said they beat their earnings projections. All is well on Wall Street and Main Street! Numbers don\u2019t lie! (Source: \u201cEarnings Insight,\u201d FactSet web site, November 8, 2013.)<\/p>\n

Or do they? That number is pretty solid, at least until you factor in a record 83% of all S&P 500 companies revised their third-quarter earnings guidance lower. It\u2019s a little easier to clear a hurdle when you significantly lower the bar. But sadly, not even that was enough for some S&P 500 companies.<\/p>\n

What about revenues? Roughly half (52%) were able to beat revenue projections. The percentage of S&P 500 companies that beat revenue estimates is above the fourth-quarter average of 48%\u2014but again, everything is relative. On the other hand, third-quarter sales are below the 59% average recorded over the previous four years.<\/p>\n

What do these numbers mean? That a large percentage of S&P 500 companies are reporting better-than-expected earnings on less-than-stellar revenue. That\u2019s a pretty tough equation to figure out, unless you toss in cost-cutting measures and share repurchase programs.<\/p>\n

It\u2019s going to be difficult for S&P 500 companies to continue to wow investors with artificially high earnings if sales remain stagnant. The writing is on the wall.<\/p>\n

Of the 85 S&P 500 companies that have issued earnings<\/a>-per-share (EPS) guidance for the fourth quarter, 73\u2014an eye-watering 86%\u2014have issued negative EPS guidance. Again, it\u2019s all relative; the five-year average of S&P 500 companies issuing negative fourth-quarter earnings is just 63%. That\u2019s a huge discrepancy by anyone\u2019s standards.<\/p>\n

And 2014 isn\u2019t looking any rosier. The best way to describe U.S. economic growth<\/a> in 2014 is \u201ctepid.\u201d According to some economists, the U.S. should have been able to achieve close to, or even above, 2.5%\u20133.0%; however, it\u2019s been stuck below two percent and is expected to stay there for much of 2014. (Source: \u201cLukewarm Economic Recovery Expected to Continue in 2014, Says IU Kelley School of Business Forecast,\u201d Newswire.com, November 6, 2013.)<\/p>\n

These third-quarter results, fourth-quarter projections, and 2014 forecasts should be a wake-up call for investors, not to avoid the stock markets, but rather, to ignore the white noise surrounding propped-up earnings.<\/p>\n

While neither exhaustive nor bulletproof, here are a few fundamentally strong companies that have been reporting good revenue growth over the last five years.<\/p>\n

Green Mountain Coffee Roasters, Inc. (NASDAQ\/GMCR) has reported five-year sales growth near 40% and is up 44% year-to-date. The company announced that third-quarter revenue increased 11% year-over-year, while third-quarter earnings were up 65% at $0.76 per share.<\/p>\n

Deckers Outdoor Corporation\u2019s (NASDAQ\/DECK) five-year sales average is just 16%, and the company is currently trading up 83% year-to-date.<\/p>\n

Meanwhile, iGATE Corporation (NASDAQ\/IGTE) has reported five-year sales growth near 30% and is up 104% year-to-date. iGATE said that third-quarter revenue increased by 8.2% year-over-year, while earnings climbed 11.1% to $0.30 per share. (Source: \u201ciGATE Reports Strong Third Quarter,\u201d iGATE web site, October 10, 2013.)<\/p>\n

Sustained earnings growth can only come on the heels of strong sales. In this economy, that\u2019s a tough order; unemployment is up, wages are stagnant, and debt levels are high. But with a little due diligence, it is possible to find solid companies bucking the weak sales growth trend.<\/p>\n

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http:\/\/www.dailygainsletter.com\/investment-strategy\/three-strong-stocks-for-lean-times\/2115\/<\/a><\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

By John Whitefoot for Daily Gains Letter On the surface, the S&P 500 third-quarter earnings season is looking pretty good. The S&P 500 is up 25.4% year-to-date and is up 32% year-over-year. So far so good! By the end of the first week of November, of the 446 companies on the S&P 500 that reported … <\/p>\n

Continue reading “Three Strong Stocks for Lean Times”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-44314","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/44314","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=44314"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/44314\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=44314"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=44314"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=44314"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}