Insiders' Blog

In the current difficult macroeconomic environment it is hard to find companies that are earning a meaningful profit, let alone growing earnings. But these 10 stocks have been rewarding investors with explosive earnings growth and stock performance to boot. You can track the entire series here.

Number 7: 99 Cents Only Stores (NYSE: NDN)

99¢ Only Stores is an extreme value retailer of primarily consumable general merchandise with an emphasis on name-brand products selling primarily at 99.99¢ or less.

As of March 28, 2009, the Company operated 279 retail stores with 199 in California, 43 in Texas, 25 in Arizona, and 12 in Nevada.

The extreme value retail industry, or deep discount industry, is one of the fastest growing retail sectors in the U.S. due to the state of the economy.

Earnings Growth:

99 Cents Only Stores' net income for fiscal 2009 was $8.5 million, or $0.12 per diluted share, compared to net income of $2.9 million, or $0.04 per diluted share, in fiscal 2008. That's a 300% year-over-year rise!

2009 was the first year in some time that 99 Cents Only Stores reported earnings growth, but now that earnings growth is expected to continue for years to come.

Earnings Prospects:

For the fiscal year 2010, analysts on average see 99 Cents Only Stores earning $0.49 per share. This would represent growth of over 300%!

For the fiscal year 2011, analysts on average see 99 Cents Only Stores earning $0.63 per share. This would represent growth of 29%.

99 Cents Only Stores is well positioned to benefit from the current weak consumer spending environment. Strong revenue growth and margin expansion will continue to drive explosive earnings growth for the company.

Stock Performance:

Shares of NDN are up nearly 19% YTD, versus the 1% slide in the S&P 500. Over the last year, NDN is up 99% versus 29% slide in the S&P 500. Over the past 5-years, NDN is down 15% versus the 20% slide in the 20% slide in the S&P 500.

Follow The Entire Series: 10 Stocks With Explosive Earnings Growth 2009

Past Series: 10 Stocks Taking Care of Investors 2009

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Shares of staffing companies are taking a hit today as after the U.S. Labor Department reported that employers cut more jobs than forecasters expected last month. The report showed U.S. nonfarm payrolls fell 467,000 in June, which was worse than the 365,000 drop economists on average were expecting.

If laid-off workers who have given up looking for new jobs or have settled for part-time work are included, the unemployment rate would be an astonishing 16.5% in June, the highest on records dating to 1994.

It does not appear that there is a solid catalyst on the forefront that will likely to change the job picture. This news sent owners of companies like Robert Half (NYSE: RHI), Kelly Services (Nasdaq: KELYA), Manpower (NYSE: MAN) and Monster Worldwide (NYSE: MWW) looking for cover.

• Robert Half International is trading down 7% to $21.92
  
• Kelly Services is trading down 5% to $10.75
  
• Manpower is trading down 7% $40.37
  
• Monster Worldwide is trading down 9.50% to $10.87

Following weeks of selling pressure, shares of Potash Corp. of Saskatchewan, Inc. (NYSE: POT) are moving higher today on reports from Bloomberg OAO Uralkali, Russia's second-largest potash producer, said it raised prices for domestic chemical producers OAO EuroChem and PhosAgro by 20% as demand for complex fertilizers improves.

Shares of Potash Corp are up 6% in mid-day trading.

The news is also boosting others in the sector Mosaic Co. (NYSE: MOS) is up 4% Terra Industries (NYSE: TRA) is up 4%, Intrepid Potash, Inc. (NYSE: IPI) is flat, Agrium (NYSE: AGU) is up 2% and CF Industries (NYSE: CF) is up 1%.

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The U-6, which some claim is the "real" unemplyment rate, rose to 16.5% in June from 16.4% in May. It is up from 10.3% in June of 2008.

U-6 is total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past.

Sepracor, Inc. (Nasdaq: SEPR) is trading down 16% following news after the close that SEP-225289 did meet the primary efficacy endpoint and separately the company announced that the FDA put two Lunesta pediatric studies on hold.

A few firms have commented on SEPR following the news:

Deutsche Bank: Downgrades from Buy to Hold - "While the announcement of disappointing clinical data for ‘289 is not impactful to near-term earnings, the risk of Sepracor facing a substantial earnings “cliff” in the 2012-2014 timeframe has increased. Moreover, with the shares having increased 63% YTD (vs +2% for the NBI – NASDAQ Biotech index), the positive impact from the company’s restructured operations has largely been priced in – particularly with Rxs still mixed and only Stedesa remaining as a significant pipeline product."

Piper Jaffray: Maintains Underweight, $11 tgt - "This is the second mid-stage clinical failure of a SEPR pipeline product this year (the first being anxiety agent SEP-441)... We continue to have significant doubts about the quality of the pipeline, making it difficult for us to envision SEPR being able to avoid a significant decline in earnings as a result of the erosion of Xopenex UDV (2012) and Lunesta (2014) due to generics. As such, we would continue to stay away from the shares."

Goldman Sachs: Maintains Sell - "Given the disappointing data, we believe it is highly unlikely that SEP-225289 moves forward... for Lunesta, while this does not impact the use of the drug in adults, it does make the likelihood of a pediatric extension for the patent questionable, which is a clear negative.

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