By Louis Navellier

Without a doubt, I always look forward to earnings season. For me, watching my favorite stocks report is like being a kid on Christmas morning. There's something extremely satisfying about watching good stocks unwrap great earnings and seeing their share prices rally as a result.

Of course, the warnings for this particular season have already set a rather ominous tone for what's ahead. So hang on -- it's going to be a real doozy sifting through the good, the bad and, well, the ugly.

Let's Start With the Bad

Last Wednesday the Dow dropped over 240 points thanks to lowered guidance from Time Warner ( TWX), Intel ( INTC) and Alcoa ( AA). Why? By guiding lower they essentially held up a neon sign saying, "Watch out, trouble ahead."

This wasn't the first sign that things are going to be dicey this season. Analysts have seen storm clouds on the horizon since the start of the fourth quarter. Look at this: At the beginning of October, the S&P 500 was expected to see a 48.7% increase in earnings. That's a pretty hefty increase! Within weeks analysts revised their estimates to a lower 14.9% increase. Today, the average S&P 500 stock is expected to announce that its fourth-quarter earnings will decline 1.1%.

The weak global economy has taken its toll on a number of flagship companies, and it's clear that they will use this quarter to announce additional layoffs, plant closures and extraordinary writedowns.

The Ugly

In general, financial stocks, tech companies and large manufacturers are among those in which I expect to see some of the worst reports. There have already been a number of warnings from companies in these sectors: Alcoa, Boeing ( BA), Intel and Time Warner, to name a few. But there are three other companies that I expect to be among the hardest-hit: Bank of America ( BAC), Microsoft ( MSFT) and General Electric ( GE). All three are due to report during Inauguration Week, and I currently rate all of them D-grade stocks.

The Good

Now, fourth-quarter earnings won't be all gloom and doom. I expect to see some bright spots in the health care sector. I'm particularly looking forward to earnings from Abbott Labs ( ABT) on Wednesday, Jan. 21. The health care giant has remarkably stable earnings growth; the company hasn't missed expectations since I don't know when. For last year's fourth quarter, Abbott earned 93 cents a share. For this year, I expect something close to $1.10, which is higher than what analysts expect. In tough economic times, I am impressed by consistency, and I expect to be impressed by Abbott yet again.

Another health care company to watch is Baxter International ( BAX), which reports Jan. 22. Both Abbott and Baxter are current "buys" on my Blue Chip Growth Buy List.

And ... We're Off

Today is the official start of earnings season, and while it may get a bit bumpy, here's what you need to keep in mind: When the economy is in rough shape, as it is right now, high-quality earnings are extremely important. That's why, in this earnings season, it's crucial for you to focus on companies that aren't just beating expectations, but are also guiding Wall Street higher for future quarters.

A company's earnings report isn't just history. If you look carefully at the numbers, as I do, you can often spot signs of what the future holds. A strong earnings report isn't like a star athlete who's on a "hot streak." Rather, there are often very definite variables that have altered the business landscape in the company's advantage. Perhaps a new product has been well received or a competitor has legal troubles. Furthermore, when a company's quarter comes in above expectations, the surplus of funds can be used to build on and accelerate the company's business advantage. This can range from paying down debt to acquiring a business rival.

The lesson is that success tends to breed success, and those clues can be found in an earnings report. Remember, I expect we'll see two good examples this quarter from ABT on Jan. 21 and BAX on Jan. 22.

Navellier owns ABT and BAX in his Navellier & Associates managed accounts and mutual funds and in his Blue Chip Growth newsletter portfolio.

Navellier is the editor and founder of NavellierGrowth.com and its related publications, including Blue Chip Growth which has a record of beating the S&P 500 3-to-1 for over 10 years. Click here to try a six-month risk-free trial today.

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