I went out on a limb last week and came out with mixed results.
I predicted that shares of Yelp (NYS: YELP) would close out the week lower. I thought its IPO pop a week earlier was gravely overdone. I can respect any dot-com speedster that drums up 74% growth the way Yelp did on the top line last year, but this is still a profitless company in a competitive niche. I nailed it. Not only did the stock lose nearly 20% of its value last week, but the shares also closed lower every single trading day. I was right.
I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average. (INDEX: ^DJI) . It's been a strong year so far for tech stocks relative to the more diversified blue chips that make up the 30 Dow components. Nasdaq clocked in with a mere 0.4% gain, but that was better than the Dow's 0.4% decline on the week. I was right.
My final call was for VeriFone (NYS: PAY) to speed past the pros on the bottom line. Well, the transactions specialist came through. VeriFone's quarterly net income of $0.58 a share was more than enough to beat out the pros swiping their plastic at $0.52 a share. I was right.
Three for three? Nice!
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. Ebix will grow its quarterly earnings
Analysts believe that Ebix (NAS: EBIX) will post a quarterly profit of $0.41 a share, just shy of the $0.42 that the insurance-industry software provider earned a year earlier.
It usually takes some serious guts to say that Wall Street is pointing in the wrong direction, but it's not such a risky call here. For starters, the pros only see a marginal dip in profitability. It's not as if they're targeting a sharp drop in profitability. The other significant data point is that Ebix has landed ahead of analyst bottom-line projections for eight consecutive quarters.
Providing cloud-based enterprise solutions has been an all-weather niche in recent years. I'm an Ebix investor, and my money's on getting this one right.
2. The Nasdaq Composite will once again beat the Dow this week
Betting on tech over stodgy blue chips has been a steady bet for me all year. Why go back on it now? Earnings season is over, but it's clear that investors are still favoring tech over blue chips.
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. Vera Bradley will beat Wall Street's earnings estimates
It pays to travel fashionably these days.
Vera Bradley (NAS: VRA) has been one of the better-performing IPOs of recent years. The company behind stylish travel gear, handbags, and accessories has more than doubled since going public two years ago.
If analysts say that the company earned $0.47 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.
Source: Thomson Reuters.
Things can change, of course. Vera Bradley's fashionable merchandise isn't exactly cheap. Unless you hit up its annual outlet sale -- and that's coming up next month as a ticketed stadium event in its home city of Fort Wayne, Ind. -- you will pay up for the Vera Bradley brand. If the economy begins slipping again, this stream may be toast.
The economy isn't slipping again, though.
Everything seems to be falling in place for another strong quarter on the bottom line.
Three for the road
Well, there are three predictions right there. Let's see how I fare this week.
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At the time thisarticle was published Motley Fool newsletter serviceshave recommended buying shares of Ebix. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors.Longtime Fool contributorRick Munarrizcalls them as he sees them. He owns shares of Ebix and is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Motley Fool has adisclosure policy.
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