3 Predictions for This Week

I went out on a limb last week and came out with mixed results.

  • I predicted that Lions Gate (NYS: LGF) would close out the week lower. Despite the great opening weekend for The Hunger Games, I thought the stock was a "buy on the rumor, sell on the news" candidate. After watching the shares bounce 4% higher on Monday, I figured I'd blow this one, but the balance of the week more than offset the initial pop. 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, but last week was a close one. The big tech names helped treat the Nasdaq to a 0.9% gain on the week, but the Dow squeezed ahead at the finish line with a 1% move for the week. I was wrong.

  • My final call was for Oxford Industries (NYS: OXM) to dress up its profitability to the point where it beats what Wall Street analysts were projecting on the bottom line. Well, the company behind the Tommy Bahama tropical clothing line coasted, earning $0.61 a share when the market was banking on only $0.54 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. Apple will close out the week higher
After several weeks -- and months, even -- of huge gains, Apple (NAS: AAPL) shares hit an all-time high of $621.45 on Wednesday. It went on to post significant drops on Thursday and Friday.

"Apple is correcting," many will argue, but I don't see this bleeding over into the week ahead. Apple may be coming off a strong run, but I see too many opportunistic Apple shareholder hopefuls waiting to buy in at signs of temporary weakness.

Even if Apple continues to retreat earlier in the week, my call is for Apple to more than make the difference back to close out the week higher than this past Friday's close.

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 stop now? Earnings season is over, but it's clear that investors still favor 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. A. Schulman will beat Wall Street's earnings estimates
Some stocks are just flat out better than others.

A. Schulman (NAS: SHLM) isn't exactly a household name, but the company is almost as good mastering its income statement as it is dishing out plastic compounds and resins. If analysts say that the company earned $0.44 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.


EPS Estimate



Q2 2011




Q3 2011




Q4 2011




Q1 2012




Source: Thomson Reuters.

Things can change, of course. Even though the economy is improving -- and demand for A. Schulman's wares should continue to grow -- there's no such thing as a perfect company. However, A. Schulman did boost its dividend rate five months ago. A company wouldn't be parting with more of its money unless it was confident about its ability to generate even more.

Everything seems to be falling into 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 The Motley Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of Apple and creating a bull call spread position in Apple. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributorRick Munarrizcalls them as he sees them. He owns no shares in any of the stocks in this story and is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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