Interested in a company that is printing money? Look no further than Xerox (NYSE:XRX), the Connecticut-based print and copier giant.
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Although the company isn't literally printing money, Xerox did disseminate its first-quarter results late last week and they were a real head-turner. In the period, the company earned 18 cents a share excluding items, which was a nickel above expectations. The firm beat expectations on the revenue line as well. Making this story even more interesting, in the release it indicated its looking for an adjusted profit of 20 to 22 cents a share in Q2, which was north of the 18-cent-a-share estimate.
And the shares can go even higher from here. Why? For one, the stock has had strong momentum and the company has put together a nice string of earnings beats. These are the types of things that money managers and funds are likely to look for when putting money, particularly new money, to work in this environment. In addition, XRX's bottom line performance is likely to garner the attention of the analyst community in a positive way. If the company is able to garner the attention of these players, we could see an increased interest in the stock even from current levels.
Presently Xerox traded at about 14 times the current year EPS estimate, which is 81 cents. That is not rock bottom cheap, but decent given the company's potential to grow its earnings line in the many years to come. The aforementioned estimate may be light by maybe a nickel. Also, if the economy continues to improve, the $1 per share estimate for 2011 could prove conservative too. But Xerox isn't the only company "printing money" these days.
Digging Up Big Profits
Caterpillar (NYSE:CAT), the world famous maker of construction equipment came out with its first-quarter earnings on Monday morning. The Illinois-based company earned 50 cents a share excluding items, which was a hefty 11 cents more than analysts had expected. Perhaps even more interesting, the company indicated that it is looking for $2.50 to $3.25 a share for 2010. That is good given that analysts are expecting the company to earn $2.69 a share.
In the years to come, this stock has a large amount of upside potential as this economy rebounds. And in the near-term, if it can generate earnings in the upper-end of management's outlook, the shares could have some legs as well.
Whirlpool (NYSE:WHR), known for its appliances is coming off a better-than-expected quarter too. In fact, Reuters reported that it earned $2.51 excluding items in Q1, and that was much better than the $1.33 the Street had anticipated. On top of that the company said it's looking for earnings of $8 to $8.50 a share for the year, which is markedly ahead of the $6.50 to $7 it had been looking for. As the economy rebounds and those who have put off major purchases need to replace their home appliances, it is quite probable that the company's products will be in demand.
General Electric (NYSE:GE) is also positioned in appliances, and of course other high profile businesses as well. That legendary company recently turned in better than expected results earlier in the month. This company has significant earnings potential and the stock could still have terrific upside in the years to come.
The Bottom Line
The above are companies that are coming off solid earnings quarters, and that could see sizable upside if the domestic economy continues to come back. Xerox stands out not only for its better than expected quarter, but also because it is a decent value given its longer-term earnings potential. (For more, see Strategies For Quarterly Earnings Season.)
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