I went out on a limb last week, and now it's time to see how that decision played out.
I predicted that Apple would close higher on the week. The consumer tech giant was heading into an uncertain holiday quarter report, but the stock had shed nearly 30% of its value since peaking four months earlier. The report was disappointing, and Apple's shares took a hit. After two strong trading days, the stock cratered on Thursday and Friday. The end result was a brutal 12% drop for the stock that no longer commands the largest market cap in the country. I was wrong.
I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average. . This has been a tricky call lately, so how did it play out this time? Well the Nasdaq closed 0.5% higher despite Apple's precipitous drop. The Dow, on the other hand, clocked in with a gain of 1.8% on the week. I was wrong.
My final call was for Netflix to beat Wall Street's quarterly profit target. The video service held up well the last time that it was targeting a quarterly loss, and the value proposition of paying $7.99 a month for its growing streaming catalog is unmatched. Analysts were looking for a deficit of $0.13 a share. Netflix came through with net income of $0.13 a share. I was right.
One out of three? Yikes! I know that 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. Research In Motion will close out the week lower
Research In Motion investors have been circling Wednesday on the calendar for a long time. The smartphone pioneer is unveiling BlackBerry 10 on Wednesday, and the shares have rallied in anticipation.
The glimpses of BB10 that the company provided last year were promising, but is it enough to undo Android's momentum? If even Apple's iOS is struggling and the heavily financially backed Windows Phone 8 rollout in the fall didn't generate much of a buzz, why should a fading mobile platform make things interesting?
We don't know, and we really won't know this week. If RIM shares drop this week, that's just a sign that the stock that has run up too high, too soon. Even if BB10 does turn enough heads to ultimately get RIM back on the map, the "buy on the rumor, sell on the news" speculators who have bid up the stock since last year's bottom will start bailing to lock in their gains.
Let's call this one a long squeeze.
2. The Nasdaq Composite will beat the Dow this week
Betting on tech over stodgy blue chips was a steady winning bet for me last 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, and the results this earnings season aren't as bad as some worrywarts had feared. 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. MasterCard will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.
MasterCard is the credit card marketer that may be well represented in your wallet. Credit card marketers cash in on transaction revenues without taking on the credit risks that the issuing banks take on.
Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a deficit of $4.82 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.
This new year will be challenging, especially as shoppers ease up on the plastic after seeing their paychecks shrink in the face of higher Social Security taxes following a two-year reprieve. However, that's a 2013 problem. For now we're looking at the tail end of 2012, and it appears to have been a strong holiday quarter from a consumer perspective.
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.
Longtime Fool contributor Rick Aristotle Munarriz owns shares of Netflix. The Motley Fool recommends Apple and Netflix and owns shares of Apple, MasterCard, and Netflix. 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.
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