3 Predictions for Next Week

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I went out on a limb last week, and now it's time to see how that decision played out.

  • I predicted that Apple would close out the week higher. The consumer-tech bellwether was starting to bounce back after its latest quarterly report, and the market was calling for the company to part with more of its growing hoard of cash. Apple meandered most of the week but ultimately closed 3.1% lower. I was wrong.
  • I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average. . This has been a tricky call lately, so how did it play out this time? It was a photo finish. The Dow only closed 0.08% lower, but the Nasdaq managed to lose even less ground. I was right.
  • My final call was for Michael Kors to beat Wall Street's quarterly profit target. The high-end retailer of handbags, apparel, and other accessories has been on a tear lately, even while some rival makers of luxury goods have struggled. It was an amazing quarter for Michael Kors. Net sales shot up 70%, powered by a jaw-dropping 41% gain in same-store sales. Analysts were looking for a profit of $0.41 a share. The fashion-forward speedster came through with net income of $0.64 a share. I was right.

Two out of three? I can do better than that.

Let me once again whip out my trusty, dusty, and occasionally accurate crystal ball to make three calls that may play out over the next few trading days.


1.SodaStream will close out the week higher
Shares of SodaStream have been moving higher since posting record quarterly results three months ago, and that kind of enthusiasm often leads to a sell-off if the next quarter isn't as exciting. I'm banking on SodaStream to come through with another blowout performance.

SodaStream continues to gain ground across its growing number of global markets, and one would think the Israeli-based company wouldn't have invested in its first Super Bowl commercial earlier this month if it wasn't in a good groove. Whether it's fresher, cheaper, or more eco-friendly than traditional soda, consumers are gravitating toward the namesake system that turns tap water into fizzy soft drinks.

I see a strong quarter when SodaStream reports on Thursday, and I think the stock will follow suit. My first call is for SodaStream to close the week higher.

2.The Nasdaq Composite will beat the Dow this week
Tech has been a big winner in recent years, so betting on tech over stodgy blue chips has been a good bet for me more often than not. I'm going to stick with this pick. Most of the names in the composite are just too cheap at this point, and the results this earnings season haven't been as bad as some worrywarts had feared.

The market is ripe for the tech-stacked secondary stocks to continue to outpace the 30 megacaps that make up the Dow Jones Industrial Average.

3. Michael Kors will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

Yandex is the company behind the leading search engine in Russia. It isn't a household name here, but it's a juggernaut in Eastern Europe.

As the world migrates online, search engines provide the richest opportunity for investors to cash in on the revolution. People visit a search site because they want to go somewhere else, and that's a dinner bell for advertisers who pay up for those leads.

Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of 8.66 Russian rubles a share in its latest quarter, I'll whip out a "greater than" sign. History's on my side!

One of my best tricks to beating the market is finding stocks that perpetually land ahead of the prognosticators. Let's go over the past year of earnings reports.

 Quarter

EPS Estimate

EPS

Surprise

Q4 2011

5.63

6.44

14%

Q1 2012

4.35

4.40

1%

Q2 2012

5.45

6.15

13%

Q3 2012

6.16

6.64

8%

Source: Thomson Reuters.

Things can change, of course. Three search engines are globally more popular than Yandex, and they've all posted mixed quarterly results this earnings season. There's also the possibility that consumers will tire of trusting the ads on search engines and stop clicking on them.

However, there are no signs that Yandex will slip this particular quarter. The average profit target has even inched higher over the past week. Everything seems to be falling into place for another market-thumping quarter on the bottom line.

Three for the road
Well, there are three predictions right there. Let's see how I fare this week.

What's the long-term prediction on Apple?

While I was wrong in my prediction Apple would close out last week up, the important area for investors to focus on is whether its sell-off is a warning sign for long-term problems or a buying opportunity for investors. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and more importantly, your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

The article 3 Predictions for Next Week originally appeared on Fool.com.

Longtime Fool contributor Rick Aristotle Munarriz owns shares of SodaStream. The Motley Fool recommends Apple, SodaStream, and Yandex and owns shares of Apple and SodaStream. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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