DuPont, Freeport McMoRan Bode Well for Earnings

NEW YORK ( TheStreet) -- After a positive Martin Luther King Jr. holiday including an upbeat inauguration for President Obama's second term, the "bull market" appears ready to charge ahead. Earnings season has been mainly upbeat and mostly positive.

Two very important companies stepped into the earnings spotlight before the market opened on Tuesday. Neither one sorely disappointed or offered any gloomy guidance going forward. If you've been waiting for a correction to buy, the response so far to Tuesday's earnings parade means you may have to wait longer.

E. I. du Pont de Nemours ( DD) is the most important of the two. Few seemed surprised when it reported that weakness in its performance chemicals, electronics and communications businesses, combined with costs related to growth initiatives were blamed for a big drop in fourth-quarter income. I guess the drop wasn't bad enough to spark a selloff?

DD reported net income of $111 million, or 12 cents per share, for the last three months of 2012, down 70% from $373 million, or 40 cents per share, for the fourth quarter of 2011. Revenue came in virtually unchanged from the year-ago period at $7.3 billion, with currency issues and other losers being offset by a 3% gain in global sales.

Sales in Latin America grew 10%, with an 8% volume gain and a 7% increase in local prices. A 6% increase in volume in the Asia-Pacific region was impacted by negative currency and pricing effects. Amazingly, DuPont was still able to beat the consensus estimate of Wall Street analysts of 7 cents per share and total quarterly revenue of $7.2 billion.

DD's fourth-quarter positive outcome was mainly due to its agricultural unit, which saw sales increase 18% to $1.5 billion on 11% higher volumes and 7% higher prices. Full-year sales for the agricultural unit were up 14% to $10.4 billion on 8% higher volume and 6% higher prices. The CEO had upbeat comments and a list of reasons for the lackluster quarter.

"DuPont stands stronger today than it did a year ago. Our segments delivered innovation, productivity and integration cost synergies. This, coupled with a record year in new product introductions, has strengthened our market position," said DuPont Chair and CEO Ellen Kullman.

"However, weakness in markets served by Performance Chemicals and Electronics & Communications provided significant challenges in 2012. We've adjusted our plans to meet the changing market environment and grow our businesses in a slow-growth world economy."

On Monday, the company "... declared a first quarter common stock dividend of 43 cents per share payable March 14, 2013, to stockholders of record Feb. 15, 2013. This dividend is the same as what was paid in the fourth quarter 2012. This is the 434th consecutive quarterly dividend since the company's first dividend in the fourth quarter of 1904."

Tuesday's earnings insights evidently were good enough for investors -- and it does have a positive ring to it. DuPont likes to see itself as a company that "... has been bringing world-class science and engineering to the global marketplace in the form of innovative products, materials, and services since 1802."

The company believes and has stated publicly that by collaborating with customers, governments, NGOs, and what they call "thought leaders" (as opposed to "thoughtless leaders"?) that it can help find solutions to such global challenges as "... providing enough healthy food for people everywhere, decreasing dependence on fossil fuels, and protecting life and the environment."

If DuPont can pull that off and grow its future earnings, profits and streams of recurring revenue, it may be added to my list of stocks that may double, but alas, not within a year. The past five years shows us what this industrial-chemical giant's stock is capable of doing.

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Based on its forward 1-year projected P/E of around 12, DD looks promising, but based on its price-to-earnings-to-growth (PEG ratio, 5-year expected) of 2.72, DD better have some very positive quarters ahead or shares are more likely to correct than go up further. Yet two hours into Tuesday's session shares moved up another 1%. Market Mavens see DuPont's "cup" as being half full!


Also before the opening bell on Tuesday we heard from a company that appears to have shot itself in both feet much to the horrific chagrin of its many shareholders. Freeport-McMoRan Copper& Gold ( FCX) has a whole lot of explaining to do, but the quarterly report caused shares to rally.

FCX reported net income for fourth-quarter 2012 totaling $743 million, 78 cents a share, compared with net income of $640 million, or 67 cents per share, for fourth-quarter 2011. Annual net income for 2012 was $3.0 billion or $3.19 per share, compared with $4.6 billion or $4.78 per share for the year 2011.

That looks like a big miss to me, but three hours after the announcement shares of FCX were trading almost 4% higher. Go figure!

Look, I already sounded off big-time about FCX last month and its all-of-a-sudden plan to reinvent itself into both an energy company and a precious metals producer. Maybe it's been taking its "plays" from the playbook of Australian conglomerate BHP Billiton ( BHP)?

In its 10 a.m. EST conference call FCX gave positive guidance on its copper and gold production businesses. You can read a summary at Freeport-McMoRan's Web site. It's still the largest, publicly traded copper producer in the world, but I wouldn't touch FCX with a 10-foot anaconda at this point; when you look at its five-year chart (notice 2012 especially) I think you'll understand why!

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FCX's price and trailing-12-month EBITDA look like a poorly made airplane heading for a crash-landing. Maybe all the bad news is baked into this controversial company, and thus today's positive price reaction. Yet with FCX's debt load, its reputation for overpaying for assets it spun off in the past, and the stock's jaded history, it's difficult for me to be optimistic about its immediate future.

Tuesday's upbeat market response to DD's and FCX's announcements bodes well for the remainder of January. The tone for the rest of the week is also positive and Tuesday's corporate news is being viewed favorably. My crystal ball is calling for a mostly up week with low volatility. Time will tell.

At the time of publication the author held no positions in any of the stocks mentioned.

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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.