PowerTrend Brief: Don’t Get Lost in the Belly of the Earnings Beast

Chris Versace

Chris Versace is a financial columnist and equity analyst with more than 20 years of experience in the investment industry.

More than 135 companies reported their December quarter results last week and that will surge to more than 490 this week with more than 260 company conference calls on tap after the Monday holiday. That’s a lot of information to plow through, dissect and put into context. Moreover, the dearth of major economic reports out over the next few days will result in those corporate earnings reports having an even greater-than-usual impact on the stock market this week.

The danger in all of that frenetic activity is missing other key milestones that can have a greater impact on what you’re investing in than a company meeting quarterly expectations and guiding the coming months in line with Wall Street forecasts.

To illustrate that point, I’m going to share with you two pieces of information that I recently shared with subscribers to my PowerTrend Profits investing newsletter this week. Was this talked about on CNBC or covered on the front page of the Wall Street Journal? No, not at all, even though both pieces of information point towards something big for the companies involved.

Under the radar at a press conference this week, Federico Tejado, the director of Starbucks Mexico, announced that Starbucks (SBUX) expects to continue opening 45 new stores a year for the next four years in Mexico. While that lone fact points to the continued growth outside the United States for Starbucks, other data suggests the company should be able to drive margin expansion even without top-line improvement. During the last several months, coffee prices have been falling, and the latest statistics from the International Coffee Organization (ICO) point to further declines. ICO’s figures have world coffee production in 2012/2013 increasing significantly and resulting in further pricing pressure. That’s good for Starbucks and other companies that derive big profits from the sale of coffee.

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The other was an announcement from NCR Corp. (NCR) and eBay’s (EBAY) PayPal that they formed a strategic alliance that will integrate PayPal’s digital wallet technology into NCR solutions. The result will enable PayPal account holders to do things such as order and pay for restaurant fare from their mobile devices, pay for gas at the pump using a mobile application or scan and pay for items while browsing in retail stores. In other words, that’s the latest data point confirming my Cashless Consumption PowerTrend.

Again, neither of these was widely touted by the mainstream financial media, but both have implications for a number of companies. Identifying those companies is one thing, but knowing how they fit in amid the shifting dynamics determines whether or not you should be investing in them. That’s the kind of perspective PowerTrend Profits subscribers get each and every week, and it has led to a portfolio with 11 out of 12 stocks in the green and double-digit percentage returns for eight of those 12 positions. Click here to join us.

PowerTalk with Keith Bliss of Cuttone & Company

On Friday, my PowerTalk interview with Keith Bliss, senior vice president at Cuttone and Company, one of the largest floor brokers on the NYSE, was made available. Keith is an old friend of mine, and he shares what he sees from the trading floor these days.

He starts the conversation off by saying 2013 is shaping up to deliver a lot more of the same for investors as 2012 — mixed economic signals, political battles and all. We also cover why the U.S. equity markets are still the best place to put your money, how to put ETFs to work for you, the risks investors face in 2013, the looming debt ceiling crisis and how you could be affected if Washington doesn’t get a deal in place, taxes, unemployment and more. Finally, we take a look at the potential threats that Keith believes could derail the markets and the economy in 2013, including energy costs, politics and currency wars.

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To read my e-letter from last week, please click here. I also invite you to comment about my column in the space provided below.

As I mentioned above, this shortened trading week will have a greater focus on corporate earnings. The following is a detailed view on which companies are reporting their quarterly results this week, as well as what economic indicators we’ll be receiving:

Monday, Jan. 21
The stock market is closed for Martin Luther King, Jr. Day

Tuesday, Jan. 22
Existing Home Sales (December)
Advanced Micro Devices (AMD)
Cree Inc. (CREE)
CSX Corp. (CSX)
E. I. du Pont de Nemours and Co. (DD)
Ethan Allan Interiors (ETH)
Freeport McMoRan Copper & Gold (FCX)
Google Inc. (GOOG)
II-VI Inc. (IIVI)
Kansas City Southern (KSU)
Norfolk Southern Corp. (NSC)
PetMed Express Inc. (PETS)
RF Micro Devices (RFMD)
TD Ameritrade Holding Corp. (AMTD)
Texas Instruments (TXN)
Verizon Communications (VZ)

Wednesday, Jan. 23
MBA Mortgage Index (Weekly)
FHFA Housing Price Index
Abbott Laboratories (ABT)
Apple Inc. (AAPL)
Coach Inc. (COH)
F5 Networks (FFIV)
General Dynamics (GD)
Jacobs Engineering Group (JEC)
McDonald’s Corp. (MCD)
Motorola Solutions (MSI)
Netflix Inc. (NFLX)
Symantec Corp. (SYMC)
Textron Inc. (TXT)
Unilever PLC (ULVR)
United Rentals (URI)

Thursday, Jan. 24
Initial and Continuing Jobless Claims (Weekly)
Leading Indicators (December)
3M Co. (MMM)
Airgas Inc. (ARG)
Amgen Inc. (AMGN)
AT&T Inc. (T)
Briggs & Stratton (BGG)
Bristol-Myers Squibb (BMY)
Cirrus Logic (CRUS)
Dover Corp. (DOV)
Flextronics International (FLEX)
JB Hunt Transportation Services (JBHT)
Kennametal Inc. (KMT)
KLA-Tencor Corp. (KLAC)
Lockheed Martin (LMT)
McCormick & Co. (MKC)
MICROS Systems (MCRS)
Stanley Black & Decker (SWK)
Starbucks Corp. (SBUX)
Timken Co. (TKR)
Verisign Inc. (BRSN)
WW Grainger (GWW)

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Friday, Jan. 25
New Home Sales (December)
Halliburton Co. (HAL)
Honeywell International (HON)
Kimberly-Clark (KMB)
Oshkosh Corp. (OSK)
Procter & Gamble (PG)
Weyerhaeuser Co. (WY)

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With the S&P 500 hitting another 5-year high, U.S. stocks rose today. Next week, House Republicans intend to vote on a temporary debt-limit increase.

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