3 Predictions for Next Week
- I predicted that Hovnanian Enterprises would surprise the market with a profitable quarter. Analysts were bracing for a loss of $0.06 a share, but homebuilders have been posting market-thumping results lately. Well, the real estate developer posted a pre-tax loss of $84.2 million, but that includes $5.3 million in expenses for a debt exchange offer and an $87 million hit from extinguishing debt. Back those one-time items out, and Hovnanian came through with an adjusted pre-tax net profit of $8.2 million. I was right.
- I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average. . This has been a tricky call lately, as the largest tech company has been falling out of favor. The market was soft last week, and the tech-heavy Nasdaq closed 0.22% lower. The Dow, on the other hand, dipped 0.15% on the week. I was wrong.
- My final call was for VeriFone Systems to beat analysts' profit estimates. The provider of electronic payment solutions had blown through analyst profit targets in each of its past four quarters, so momentum was on its side. That didn't happen this time. Wall Street was bracing for an adjusted profit of $0.76 a share, and that's exactly what VeriFone earned. I was wrong.
One 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
The market hasn't been kind to Apple . The world's most valuable tech company has shed nearly 28% of its value since peaking above $700 just three months ago.
Is the drop warranted? Analysts are concerned that Apple is losing market share and facing a margin crunch. They're talking down the company's near-term earnings prospects. These are the developments that warrant a cautious approach, but the sell-off is getting ridiculous.
Apple is too cheap right now, and you just know that it's going to break out on an aggressive share buyback plan or come clean about its smart TV plans. Either way, Apple has fallen too far, too fast.
My first prediction is that Apple will move higher on the week.
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 still think technology is the best sector to be invested in these days.
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. Apogee Enterprises will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.
Apogee Enterprises is a provider of customized glass. Balancing aesthetics, energy efficiency, and element-tested durability, Apogee is a major player in glass window exteriors of high-rise corporate and residential buildings.
Another thing it does is make analysts look like perpetual underachievers. If analysts say the company earned $0.23 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.
Things can change, of course. Demand for Apogee's solutions are naturally susceptible to the ups and downs of commercial real estate. However, the market has been warming up to construction lately. Firming real estate prices, low mortgage rates, and encouraging employment trends are pointing to continuing improvement.
Everything seems to be falling into place for another market-thumping 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 Next Week originally appeared on Fool.com.Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and VeriFone Holdings. Motley Fool newsletter services recommend Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.