3 Predictions for This Week

I went out on a limb last week and got clobbered.

  • I predicted that Pandora Media (NYSE: P  ) would rise on Wednesday. It did post better than expected results on Tuesday night, but the market still wasn't impressed.
  • After four years of it closing out every quarter with fewer subscribers than it started with, I figured that TiVo's (Nasdaq: TIVO  ) losing streak would continue. It didn't. The DVR pioneer managed to close out its fiscal third quarter with a net gain of 117,000 subscribers. The number of TiVo-owned subscribers did post yet another sequential decline, but I never specified that actual component. Well played, TiVo. Now see what you can do about those widening deficits.
  •  My final call was for Perfect World (Nasdaq: PWRD  ) to beat Wall Street's profit targets, the way that the Chinese online gaming company has done for all but one quarter over the past year. Three of its four publicly traded peers had also landed ahead of the prognosticators. No dice. Perfect World's adjusted profit of $0.53 a share was well short of the $0.67 a share that Wall Street was expecting.

I knew it. A week after going three-for-three, I blow it.

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. Barnes & Noble will post a loss
I'm not sure why analysts believe that Barnes & Noble (NYSE: BKS  ) will bounce back with a quarterly profit of $0.02 a share when it reports on Thursday. Even with Borders going out of business, folks just aren't buying books the way they used to.

I understand that B&N is no longer exclusively a bookseller story, but how profitable do you think the retailer's Nook business is when it's neck deep in an e-reader price war?

Analysts have consistently overestimated B&N's bottom line for a year now. It's going to happen again.

2. Shares of OmniVision will rise on Wednesday
OmniVision Technologies (Nasdaq: OVTI  ) has seen its stock get pounded in recent weeks.

It's a leading maker of the image sensors found in smartphones, digital cameras, laptops, and tablets.

This is becoming a competitive market, and OmniVision shares took a hit when it was revealed that it wasn't the only company providing iPhone 4S camera chips. After a couple of years of healthy growth, earnings are starting to go the wrong way.

The trend here is clearly negative, but the selling is overdone. OmniVision isn't a third of the company it was earlier this year, though it's currently being valued as such. I like the company's chances of coming through with comforting words on Tuesday night when it reports its quarterly results, or at least convincing investors that things aren't as bleak as the share price suggests.

A nice bounce after earnings makes sense to me, even if the company still has longer-term concerns.

3. Ulta Salon will beat Wall Street's earnings estimates
I don't pretend to know anything about the changing shades of lipstick during times of strife. I wouldn't know a crew cut from a mullet. However, I do know stock trends. Ulta Salon (Nasdaq: ULTA  ) has made mincemeat out of Wall Street targets in the past, and it's one of the more resilient growth stocks out there.

If analysts say that Ulta earned $0.38 a share in its latest quarter, I pay a tribute to the recently deceased Andrea True and belt out, "More, more, more."

One of my best tricks for beating the market is finding stocks that perpetually land ahead of the prognosticators. Let's go over Ulta Salon's past year of earnings reports.

 

EPS est.

EPS

Surprise

Q2 2011 $0.32 $0.38 19%
Q1 2011 $0.31 $0.37 19%
Q4 2010 $0.44 $0.49 11%
Q3 2010 $0.20 $0.23 15%

Source: Reuters.

Everything seems to be falling in place for another strong quarter out of Ulta Salon.

Well, that's three predictions right there. Let's see how I fare this week.

If you want to see how these market calls pan out, consider adding Ulta Salon, OmniVision Technologies, and Barnes & Noble to My Watchlist to track upcoming news.

Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

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 the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


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