3 Stock Predictions for the Fourth Quarter
The best thing about the brutal third quarter is that it's now fading in the rearview mirror.
There was plenty of action in Q3. Several CEOs were shown the door, including a few that went for the doorknob on their own. We had layoffs, sluggish consumer confidence, and a nail-biting finish to Major League Baseball's regular season finish.
It's October. It's time to move on.
Here are a few predictions for the final three months of 2011.
1. Apple will top ExxonMobil for the market cap crown
In freakishly neck-and-neck fashion, Apple (NAS: AAPL) and ExxonMobil (NYS: XOM) closed out the third quarter with market caps of just over $353 billion.
It's been a tight race since the tech darling closed the gap with the oil giant earlier this year, and now it's time for one to pull away for the lead.
I'm not necessarily a bear on ExxonMobil. But I believe that Apple is just starting to scratch the surface here. Apple doesn't need tomorrow's iPhone 5 announcement to be a winner in order to deliver another blowout quarter. Apple continues to trade at a ridiculous discount to its heady growth rate, and things are just starting to pick up overseas.
Apple shares will outpace ExxonMobil's stock this quarter to close out the year as the country's most valuable company by market cap.
2. Sirius XM will close higher
One of my growth stock predictions for all of 2011 was that Sirius XM Radio (NAS: SIRI) would close higher this year after more than doubling in each of the two previous years. I'm in danger of coming up short on that call. The satellite radio giant is trading 7% lower since closing out 2010 at $1.63.
It's been a good year for Sirius XM. The media mogul has expanded on its profitability and its subscriber count. It has already revealed that its rates will inch higher come January. Sirius XM 2.0 -- the company's first receiver-based upgrade since rolling out commercially -- is still on track to hit the retail market during this quarter.
The competition has gotten smarter. Streaming is becoming more viable and seamless for drivers. However, the simplicity of Sirius XM and the growing number of factory-installed receivers in new cars will keep premium radio climbing in popularity for now.
3. Netflix's stock will bounce back before its subscriber base does
I have a shot with my 2011 call for Sirius XM Radio, but it will take a miracle for my bullish Netflix (NAS: NFLX) call from last December to work out.
Shares of Netflix are off nearly 36% this year -- and down by even more if we start at its summertime peak.
I was also way off in calling for a bounce to materialize last week, but I'm no Pollyanna. I called Netflix out back in July, when it announced that it was inching prices higher on many of its plans. I also wouldn't be surprised if Netflix closed out the third quarter with fewer than the 24 million subscribers it is publicly targeting. The video titan's reputation has continued to take a beating, and churn must be ridiculous right now.
Couch potatoes will continue to be net cancellers of Netflix and Qwikster over the next three months. It's going to take some time before the anger subsides long enough for them to realize that Netflix is the best at what it does. However, I do think the stock will close higher during the fourth quarter.
It's not the buyout chatter. I don't buy into stories of Amazon.com (NAS: AMZN) buying up Netflix after it splits its business in two. Netflix would sooner unload its real-world distribution -- selling Qwikster to Redbox parent Coinstar (NAS: CSTR) -- than surrender the future of video consumption. I just feel that the dust will eventually settle for Netflix, and fewer subscribers paying more for Netflix will be more lucrative than the business that CEO Reed Hastings was running on the friendlier side of these controversial moves.
Three months and counting
In the spirit of full accountability, I have entered bullish calls on Apple, Sirius XM, and Netflix on Motley Fool CAPS. I have also entered a bearish call on ExxonMobil, though obviously the oil and gas behemoth doesn't have to head south for my market cap call to be correct.
If you're feeling equally brazen, use the comments box below to enter your own Q4 predictions. I'll be back in three months to see how my calls -- and yours -- panned out.
If you want to track these calls to see how these three stocks hold up over the next few months, consider adding them to My Watchlist.
At the time this article was published Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.The Motley Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of Amazon.com, Apple, Coinstar, and Netflix.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Apple.Motley Fool newsletter serviceshave recommended creating a bear put spread position in Netflix. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.