3 Predictions for the New Week

3 Predictions for the New Week

I went out on a limb last week, and now it's time to see how that decision played out.

  • I predicted that Glu Mobile would close higher on the week. The publisher of mobile apps had seen its shares lose nearly half of its value over the past year, and Tuesday's earnings report seemed like a good time to tell its side of the story. Glu ended up posting a quarterly loss on declining revenue, restating its past three years of financials along the way. The stock fell 10% on the week. 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, this wasn't a good week for stocks. The Nasdaq moved 0.8% lower, and the Dow managed to close 1.5% lower. I was right.

  • My final call was for Green Mountain Coffee Roasters to beat Wall Street's income estimates in its latest quarter. The company behind the popular Keurig single-cup coffee brewer has been posting blowout quarterly results over the past year. I was banking seeing on the trend continue. Analysts were looking for a profit of $0.77 a share during the quarter, and it came through with net income of $0.82. The stock didn't move higher on the news, as revenue came in a bit light, but it was still a beat on the bottom line. 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. Tesla Motors will close lower on the week
There's no denying that Tesla Motors is this year's market darling. If you'd taken the money that you were going to use to buy a Volt or a Leaf at the start of the year and invested it in Tesla, you'd have enough money now to buy a pair of Tesla Model S sedans.

However, even the hottest stocks take a breather. Tesla soared after a truly blowout quarter last week, but the stiff valuation should cool the stock after the latest short squeeze subsides. My long-term prognosis for Tesla is bullish, but I think it shifts into reverse over the next few days.

My first call is for Tesla to close lower on the week.

2.The Nasdaq Composite will beat the Dow this week
Tech has been a big winner in recent years, so betting on tech over stodgy blue chips has been a good bet for me more often than not.

I'm going to stick with this pick. Most of the names in the composite are just too cheap at this point, and tech should be what carries us through the economic recovery. Yes, earnings reports have been rough in some places this season, but the long-term outlook is still quite favorable. 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. Brocade will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

Brocade Communications is a provider of networking storage solutions. Despite a share price that's been waffling about in the single digits for more than six years, Brocade has been able to carve out a cozy yet profitable living serving data-storage needs. It's also trying to position itself as a play on Big Data.

Another thing it does is make analysts look like perpetual underachievers. If analysts say that the company posted a profit of $0.12 a share in its latest quarter, I'll argue that it held up better than that. 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



Q3 2012




Q4 2012




Q1 2013




Q2 2013




Source: Thomson Reuters.

Things can change, of course. Brocade shares slipped in the latest quarter after the company provided uninspiring guidance, and analysts are targeting small declines in revenue and profitability for the period. Despite the Big Data push, Brocade isn't participating in the growth that many of those niche players are experiencing.

However, it's hard to argue against the trend. 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 the New Week originally appeared on Fool.com.

Longtime Fool contributor Rick Munarriz owns shares of Green Mountain Coffee Roasters. The Motley Fool recommends Green Mountain Coffee Roasters and Tesla Motors and owns shares of Tesla Motors . 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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