5 Reasons Not to Worry This Week: Smith & Wesson Holding Corporation (SWHC), Ciena Corporation (CIEN)

Page 1 of 2

Smith & Wesson logoIt’s not a perfect world out there for investors, but things may be starting to get better.

I recently went over some of the companies that are expected to post lower quarterly profits when they report this week. Thankfully, they’re the exceptions and not the rule.

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

Company Latest-Quarter EPS (estimated) Year-Ago Quarter EPS
Smith & Wesson Holding Corporation (NASDAQ:SWHC) $0.23 $0.07
Compass Diversified Holdings (NYSE:CODI) $0.28 $0.22
Hovnanian Enterprises, Inc. (NYSE:HOV) ($0.10) ($0.17)
Ciena Corporation (NASDAQ:CIEN) ($0.13) ($0.17)
Ferrellgas Partners, L.P. (NYSE:FGP) $0.82 $0.47

Source: Thomson Reuters.

Clearing the table
Let’s start at the top with Smith & Wesson. Firearms are big business, and investors saw that firsthand last week when a Smith & Wesson Holding Corporation (NASDAQ:SWHC) rival posted blowout quarterly results.

Fears of fresh gun control legislation have resulted in a run on firearms, and that’s likely to keep results strong for the gun makers in the near term. The long-term ramifications are a different matter entirely, naturally. However, for now analysts see Smith & Wesson’s profitability more than tripling when it reports tomorrow.

True to its name, Compass Diversified Holdings (NYSE:CODI) watches over an eclectic collection of eight middle-market businesses.

Unlike traditional business development companies that provide financing to dozens of upstarts, Compass actually maintains controlling stakes in its investments.

Compass investments include rigid printed circuit boards producer Advanced Circuits, upholstered furniture maker American Furniture Manufacturing, and personal hydration products specialist CamelBak Products.

We can tie Compass to the firearm craze, since the company also watches over gun safe manufacturer Liberty Safe.

The winning proposition for income chasers here is that Compass commands a healthy yield of 9.1%, having distributed a whopping sum of $8.8752 a share to investors since going public seven years ago.

Hovnanian Enterprises, Inc. (NYSE:HOV) is the latest homebuilder to report quarterly results.

The housing industry has bounced back in a major way over the past year. The S&P/Case-Shiller 20-city composite was released last week for the month of December, and the year-over-year gain of 6.8% makes 2012 the best year for home prices since 2005.

Prices rose in 19 of the 20 cities in the popular homebuilder gauge. New York City was the lone and surprising holdout.

Firming home prices is naturally a great development for developers. Regardless of the glut of existing homes on the market — and that’s another trend that continues to improve in the favor of developers — if folks are willing to pay more for existing homes they’re going to be paying more for new digs, too.

It’s not perfect. Residential developers are naturally at the mercy of interest rates. If mortgage rates surge higher there will be less bang for the potential homebuyer’s buck. However, things are going well for the leading homebuilders that are coming through with explosive profit growth and healthy backlogs of future orders.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 44 percentage points in 21 months Learn how!

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!