Three Big Money Profit Stocks

By Author: prconfidential
Total Articles: 15
Comment this article

The American corporate profit machine is in full swing:

Stock market darling Google Inc. (NASDAQ/GOOG) reported late last week that its third-quarter profit hit $2.73 billion on sales of $9.72 billion. Earnings and revenue grew 26% and 33%, respectively, from the same period of last year.

This morning, troubled Citigroup, Inc. (NYSE/C) announced that it made $3.8 billion in its third quarter, an increase of 60% for the third quarter of 2010.

Another big U.S. bank, Wells Fargo & Company (NYSE/WFC), announced this morning that its third-quarter profit rose 21% to $4.1 billion from $3.34 billion in the third quarter of 2010.

What do these three companies have in common? They all beat stock market analyst profit expectations. Collectively, these companies booked profits of $10.63 billion in the three-month period ended September, 30, 2011.

While stock market analysts have been cutting their earnings expectations for corporate America, third-quarter earnings growth have been better than expected. Bellwether General Electric Company (NYSE/GE) reports ...
... its third-quarter profit later this week—and I believe it will surprise on the upside as well. The stock market has been very kind to this stock as of late.

Corporate America is faring better than what was expected. Again, I believe stock market advisors became too negative too quickly this summer. On the backdrop of negative stock market sentiment and rising corporate profits, the stock market is riding the wall of worry quite well.

But there is a big negative for the economy. Public companies will do whatever it takes to make their shareholders happy. And happiness comes from the higher stock market prices of companies. If earnings growth isn’t happening fast enough, companies will cut expenses to bring profits up. In most cases, payrolls are cut first, further impacting the unemployment rate in America.

Just look at these two reports from this morning:

The world’s biggest maker of lightbulbs, Amsterdam-based Royal Philips Electronics NV, a company most investors simply refer to as Philips, announced Monday that it plans to cut 4,500 employees to boost profits.

Lowe’s Companies, Inc. (NYSE/LOW), the big U.S. home-improvement retailer, said this morning that it will cut about 2,000 jobs and close 20 underperforming stores, as it tries to maximize profits.

Bottom line: companies are reporting better profits than expected. These same companies will trim payroll “on a dime” to improve earnings. Better earnings result in higher stock market prices. Stock market advisors were wrong in jumping into the bear market camp this summer. The stock market will ride the wall of worry higher, as the bear market rally continues.

With Profit Confidential we analyze the actions of the stock market, precious metals, interest rates, real estate and other investments so we can tell you what we believe today’s financial news will mean for you tomorrow!