3 Predictions for This Week
I went out on a limb last week and came out with mixed results.
- I predicted that Mead Johnson Nutrition (NYS: MJN) would bounce back after its Enfamil scare. The infant formula maker helped make its own luck by proclaiming that its powdered formula was clear early in the week, but it wasn't until this past Friday night that the FDA officially cleared the company. Either way, Mead Johnson shares did bounce back 5% last week. I was right.
- I predicted that the S&P 500 would close in positive territory for all of 2011. Well, it was a photo finish. The index began the year at 1257.64. It closed out 2011 at 1257.60. Historians will point to 2011 as a slightly positive year for the index once you tack on dividends (which aren't factored into the close), but I never made that stipulation. This has been the closest prediction yet, and I was off by all of 0.04 of a point. I was wrong.
- My final call was for Zynga (NAS: ZNGA) to bounce back by having positive gains on the week. The social gaming giant entered the week at $9.39, closing out a down week by the market in general at $9.41. Another photo finish, but I'm smiling with this snapshot. I was right.
Two out of three? I know 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. Sonic will come up short in its latest quarter
I'm a fan of Sonic (NAS: SONC) , but maybe that's because I don't have one nearby. It's a rare treat of throwback nostalgia. The food isn't all that impressive, but the drive-in charm and rock-bottom prices make up for that.
However, the concept has been a financial dud lately. Sonic has missed Wall Street's profit targets in two of the past three quarters. That's the kind of trend that makes the $0.09 a share profit that analysts are expecting when the fast-food chain posts its quarterly results tomorrow iffy at best.
Consumers are still pinching pennies, and when they go to Sonic they're likely loading up on the low-margin sandwiches and fewer of the higher-margin specialty beverages and sides. My call is for Sonic to earn less than the $0.09 a share the pros are predicting.
2. The S&P 500 will close higher for the week
These are uncertain times for investors. I know it.
However, the beauty of a flat 2011 -- a year that saw most companies improving their bottom-line performances -- is that valuations are even cheaper now.
Wake up, investors. This is a golden opportunity to step in and buy the stocks you like at attractive prices. The economy isn't perfect. Europe's sovereign debt crisis still has some more pain to dish out. Set those fears aside. Deep down inside, you know that 2012 will be a positive year, and it starts with a strong first week.
January is historically a positive month for the market, but now it makes sense that investors will dive back in early. This week will find the S&P 500 closing higher.
3. Monsanto will beat Wall Street's earnings estimates
Things seem to be going right for Monsanto (NYS: MON) these days. The agrichemical giant is having no problem selling its enhanced seeds to a growing global market. Monsanto is clearly at the right place at the right time.
Another thing that Monsanto has done well is consistently land ahead of the pros.
If analysts say that the company earned $0.16 a share in its latest quarter, I'll whip out a "greater than" sign. History's on my side!
One of my best tricks for 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.
Everything seems to be falling into place for another strong quarter out of Monsanto, even though this is a seasonal industry where its best two quarters are about to come.
Well, that's three predictions right there. Let's see how I fare this week.
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At the time this article was published Motley Fool newsletter serviceshave recommended creating a synthetic long position in Monsanto. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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