Flood of Earnings Begin - Monday/Tuesday Preview

Long time readers will know our love/hate relationship with earnings season. As information hogs we love more data; but as stock market participants we hate the massive overreactions to companies based on 90 days of business and a penny here or there in earnings per share, or +/- 1-2% of revenue on the top line. But this is the only game in town and if certain companies should win or lose 20-30% of their market value within seconds of the all important press release is not up to us; this is the market "we've" created. So we'll gap up or down in many individual stocks, and the market as a whole based on 1-2 "important" companies that - based on a few pennies here or there - shift the entire complexion of a $14 Trillion economy. Or so the pundits will opine. In most cases, I will be cutting back positions going into earnings since they have become 50/50 propositions with completely unknown risks v returns as lemmings rush in (or out).

Every quarter I have a bevy of names I look into it to figure out what exactly is going on with the economy, both now and looking ahead - rather than relying on government reports. Some I will lay out in these pages but due to the flood of earnings we soon begin I won't be able to detail the majority via blog. There are also a host of smaller companies in niche areas which we're invested in or looking into, I'll also try to touch on many of those.

Last week was the first real hefty week of earnings, but the onslaught really begins in the week ahead. As we stated last quarter, we expect a lot of pulled guidance from companies who have little visibility - and that came true. I continue to believe that will happen and trust me, anyone taking solace from a retailer saying they have visibility out > 24 hours is reaching; go check 2 years ago or 1 year ago what retailers were "guiding" for the full year versus what actually happened. The other twist I see happening are companies under the protective wing of government "surprising" upward whereas those facing the "real economy" having a tough time of it. But even in the latter case - no matter how bad the numbers are year over year - if all we care about is "better than expected" those too can rally (and they have). The last thing of interest will be the effect of the stronger dollar on multinationals - about a year ago at this time the dollar was weak, and many a company (as we outlined) was smashing numbers on very little more than weak dollar. Without that tailwind we'll see how some of these international beasts do.

Here are some of the names I'll be interested in Monday and Tuesday.

Monday

Allegiant Travel (ALGT) - fund holding; this airline company has been extramplory throughout the downturn even with $140 oil last year. I've had an exceedingly difficult time using technical analysis on this name due to multiple headfakes but when it runs, it really runs. On the earnings front they already announced last week they will beat to the upside so we'll see how much of this is in the stock already... at >$4.00 EPS forecasted for 2009, this is still not an expensive stock considering its growth. I am hoping for some sort of bad news since I have only a holding position - awaiting some material pullback.

• Allegiant Travel Co. said it expects first-quarter earnings to beat Wall Street's expectations. Late Tuesday the airline and travel operator said it anticipates a profit of $1.34 to $1.38 per share. Analysts polled by Thomson Reuters, whose estimates generally exclude one-time items, forecast net income of $1.20 per share.