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 Sourcefire (NAS: FIRE) would close higher on Wednesday. The network security specialist had beaten Wall Street profit targets by 27% or better over the past year, and I figured that a strong quarterly report on Tuesday night would move the stock higher. It didn't work out that way. Sourcefire did manage to serve up a better-than-expected quarterly profit, but an otherwise problematic report sent the stock nearly 17% lower on Wednesday. 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 clawed back during the second quarter. How will the third quarter play out? Well, the market got off to a rough start. Both gauges inched lower in each of the week's first four trading days, but a strong rally on Friday pushed both market metrics slightly higher on the week. The Dow clocked in with a 0.2% gain on the week, but the tech-heavy Nasdaq managed to move 0.3% higher. I was right.
My final call was for Liquidity Services (NAS: LQDT) to beat what Wall Street analysts were forecasting on the bottom line in its latest quarter. The provider of online marketplaces for surplus and salvage assets has been consistently landing ahead of where Wall Street's expectations are perched over the past year. Liquidity Services' adjusted profit of $0.56 a share surpassed the $0.47 a share that 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. Sirius XM Netflix will close out the week higher
This is going to be a big week for Sirius XM Radio (NAS: SIRI) . The only game in town when it comes to satellite radio reports its latest quarterly financials on Tuesday. Sirius XM already reported encouraging subscriber metrics for the second quarter, so most of the good news is already out.
However, there's a battle for control taking place at Sirius XM. There have also been encouraging signs in new auto sales, making it highly unlikely that the media giant will serve up disturbing near-term guidance.
Sirius XM has been trading in a tight range in recent weeks, and a strong quarterly report and conference call may be just the thing to move the shares higher.
My first prediction is that Sirius XM will close out the week 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 this 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 megacaps that make up the Dow Jones Industrial Average.
3. SodaStream will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others. One of those perpetual market thumpers is SodaStream (NAS: SODA) .
Cynics love to bash the stock, arguing that the Israeli company behind the home-based soft-drink maker will be a passing fad. It doesn't seem to dawn on the skeptics that SodaStream's been gaining ground in Europe for years -- and that it's been gaining in popularity stateside since its rollout here two years ago.
Another thing the company does is make analysts look like perpetual underachievers.
If analysts say the company earned $0.46 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 | $0.31 | $0.42 | 36% |
Q3 2011 | $0.34 | $0.56 | 65% |
Q4 2011 | $0.29 | $0.32 | 10% |
Q1 2012 | $0.46 | $0.55 | 20% |
Source: Thomson Reuters.
Things can change, of course. Consumers can turn on sugary soft drinks for health reasons. SodaStream's product also has many strong features, but the value argument -- at least relative to house-brand pop -- isn't as strong as other home-based makers. It's still hard to bet against a company that has landed ahead of the pros by double-digit percentage margins every quarter over the past year.
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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The article 3 Predictions for This Week originally appeared on Fool.com.
The Motley Fool owns shares of SodaStream International.Motley Fool newsletter serviceshave recommended buying shares of Sourcefire, Liquidity Services, and SodaStream International. We Fools may not 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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