Another week of gains for stocks reinforces the comeback of buy and hold investing. Market pros are waiting not so patiently for the inevitable bottom to drop. So far, they have to keep waiting.
In the meantime, patient investors are being rewarded handsomely for staying in stocks riding the wave of economic recovery, and the thawing of fears that the world is about to collapse.
How long it will last is anyone’s guess. The nature of the economy and of owning stocks is growth. It may feel uncomfortable as we go up, but the reality is that expansions are very natural things. Instead of trying to guess the direction one week to the next, it really is paying to own stocks and ignore the chatter about a forthcoming correction.
The trick, of course, is balance. We also know that contraction is just as much a part of the game. That means gains today may be gone tomorrow.
While it is easy to dismiss the bear argument at the moment, don’t become too cavalier with your portfolio. I’ve stated before that while it might be wise to pursue a buy-and-hold strategy at the moment, it is also wise to take advantage of arbitrage opportunities by trading stocks.
The dynamic is interesting and more present each day the market moves higher. Animal spirits seem to want to lift stock prices to new heights. Actual earnings performance pushes aside those animal spirits with reality. Even if for only a moment, that moment is enough for you to trade profitably.
Here are 4 companies to watch this week as they deliver earnings reports:
Jabil Circuit
Jabil Circuit (NYSE:JBL), a semiconductor company, reports results for the quarter ending Feb. 29, 2012 on March 20. Wall Street expects Jabil to report a profit of 58 cents per share in the period. That estimate is two cents per share lower than where it stood 90 days ago. Jabil has matched or exceeded estimates in each of the last four quarters. Shares of Jabil have gained 43% in the last 12 months. Analysts expect profit growth of 13% from the current fiscal year ending Aug. 30, 2012 to the next. At current prices, shares trade for 10 times current fiscal year estimated earnings.
Dollar General
Dollar General (NYSE:DG), a discount retailer with nearly 10,000 stores in 35 states, reports results for the quarter ending Jan. 31, 2012 on March 22. Wall Street expects Dollar General to report a profit of 82 cents per share in the quarter. That estimate has held steady over the last 90 days.
Dollar General has exceeded estimates in three of the last four quarters. Dollar General shares are up about 50% in the last year. Analysts expect profit growth of 17% in the current fiscal year ending Jan, 31, 2013. At current prices, shares trade for 16.5 times current fiscal year estimated earnings.
FedEx
FedEx (NYSE:FDX), the giant express delivery and ground freight company, reports results for the quarter ending Feb. 29, 2012 on March 20 before the market opens. Wall Street expects FedEx to report earnings of $1.35 per share in the period. That estimate is 3 cents per share higher than where it stood 90 days prior. FedEx has beaten the number in each of the last three quarters. Shares of FedEx are up slightly over the last year. Analysts expect Fedex to grow profits by 17% from the current fiscal year ending May 31, 2012 to the next. At current prices, shares trade for 13 times next year’s estimated earnings.
Nike
The swoosh-laden athletic shoe and apparel company reports results for the quarter ending Feb. 29, 2012 on March 20 after the market closes. Wall Street estimates Nike (NYSE:NKE) to report a profit of $1.16 in the quarter. That estimate is 10 cents per share lower than where it stood 90 days ago. Nike has exceeded estimates in each of the last three quarters. Shares of Nike are up 45% in the last year. Analysts project earnings growth from the current fiscal year ending May 31, 2012 to the next of 18%. At current prices, Nike trades for 23 times current fiscal year estimated earnings.
