3 Predictions for This Week
I went out on a limb last week, and now it's time to see how that decision played out.
I predicted that IMAX (NYS: IMAX) would close out the week with a positive gain. Between the opening of The Amazing Spider-Man and strong box0office results year-to-date for most of the Hollywood movies being digitally remastered for IMAX screenings, I figured there would be more interest in buying than selling the stock. The shares hit a nearly two-month high early in the week, but the stock closed out the week with a small loss. I was wrong.
I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average. (INDEX: ^DJI) . This was a consistent winning call during the first quarter, but the Dow 30 has won most of the early rounds this quarter. Well, the market had an uninspiring run. The Dow clocked in with a loss of 0.8%, and the tech-heavy Nasdaq managed to remain barely positive in inching 0.1% higher. I was right.
My final call was for Xyratex (NAS: XRTX) to beat what Wall Street analysts were forecasting on the bottom line in its latest quarter. The data-storage company has been landing ahead of where Wall Street's expectations are perched over the past year. Xyratex's adjusted profit of $0.32 a share surpassed the $0.29 analysts were forecasting. 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
It took Apple (NAS: AAPL) more than two months to regain the $600 mark. Now that it's here, it's time for the world's most valuable tech company to pad those gains.
After a springtime lull, technology stocks are regaining their swagger, and the Cupertino giant should lead the way. Even though the past few days have been ripe with headlines about another cheap Android tablet on the way and about rivals that are dropping operating-system prices, Apple's as strong as ever.
My first prediction is that Apple will close out the second week of July with positive gains.
2.The Nasdaq Composite will beat the Dow this week
Betting on tech over stodgy blue chips was a steady winning bet for me earlier this year. This has been a losing bet lately, but I'm going to stick with the pick. Most of the names in the composite are just too cheap at this point.
The market is ripe for the tech-stacked secondary stocks to continue to outpace the 30 mega-caps that make up the Dow Jones Industrial Average.
3. Wolverine World Wide will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.
Don't tread on Wolverine World Wide (NYS: WWW) . The footwear maker behind Hush Puppies, Sebago, Merrell, and several other shoe lines has soul in its soles.
Another thing it does is make analysts look like perpetual underachievers. If analysts say 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.
Quarter | EPS Estimate | EPS | Surprise |
|---|---|---|---|
Q2 2011 | $0.46 | $0.48 | 4% |
Q3 2011 | $0.75 | $0.82 | 9% |
Q4 2011 | $0.45 | $0.47 | 4% |
Q1 2012 | $0.55 | $0.64 | 16% |
Source: Thomson Reuters.
Things can change, of course. Analysts thought Wolverine World Wide would match last year's quarterly profit of $0.48 a share three months ago. The target dropped to $0.45 a few weeks later, and earlier this month it fell again to $0.44. It's not a comforting trend to see analysts adjusting their profit forecasts lower.
However, there are no signs that the company will fumble this quarter to the point of failing to live up to Wall Street estimates. Everything still 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 Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of IMAX and Apple and creating a bull call spread position in Apple. 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. The Motley Fool has adisclosure policy.
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