There's only one way to practically guarantee making a killing in this market. It's easy advice, but it's difficult to execute.
You have to know what companies will do in the future.
Obviously this is easier said than done. No one's handing you the keys to a time-traveling DeLorean. You actually have to assess current trends, see where they will probably be heading, and then go out on a limb by making an actual call.
Let me get you started. I'm going to go over three things that I see happening in 2012, and they all have investable implications. Feel free to agree or disagree. You're welcome to add to my list by making 2012 predictions of your own in the comments box at the end.
1. There will be cheaper iPads
Apple's (Nasdaq: AAPL ) been able to cling to its $499 to $829 price points through two generations of its trendsetting tablet. The third time won't be the charm.
I'm not suggesting that the iPad 3 itself will be cheaper. There are actually two paths for Apple to get a cheaper tablet on the market to compete with the initial success of Amazon.com's (Nasdaq: AMZN ) Kindle Fire, a tablet that has already sold "millions" after just four weeks on the market.
It can go small. Asian tech watcher DigiTimes -- a publication with a good sense of what Apple suppliers are up to -- is reporting that Apple will roll out a smaller iPad with a 7.85-inch screen by the end of next year. Moving away from the 9.7-inch touchscreen of its flagship tablet may seem blasphemous. Steve Jobs used to refer to gadgets sized between smartphones and iPads as tweeners. However, the smaller screens will be cheaper, giving Apple an easy way to hit the market with more compelling price points.
Why wait until next year's fourth quarter, though, for a product that may not even materialize?
You may be able to get your hands on a new iPad for less than $499 as early as next quarter. Just as Apple has done with the iPhone after its first few years on the market, why stop selling the iPad 2 when the iPad 3 comes out? Apple can stick to its $499 price for the latest generation of iPads, while marking down the models they are replacing by $100 (if it's smart) or even $200 (if it's brave).
The balance here is to arrive at a price point that won't eat into the latest models, but still attacks the proliferation of Android tablets that are taking a bite out of Apple's market share this holiday quarter.
2. Netflix will grow its subscriber base
We're nearly wrapping up what should be a very ugly quarter for Netflix (Nasdaq: NFLX ) . It's not a coincidence that Netflix press releases went from describing the video giant as a service with "more than 25 million members" in October to serving "more than 20 million streaming members" last month.
It's not just the "streaming" distinction, since Netflix did close out September with 22.9 million streaming subscribers.
However, things should get easier once the anger subsides. After all, is there any other legal service out there that's comparable to Netflix's digital depth and reasonable $7.99 a month price point?
3. Sirius XM will grow revenue by more than 10%
Satellite radio has been a slow grower on the top line in recent quarters, but Sirius XM Radio (Nasdaq: SIRI ) expects that to accelerate next year. The media giant's guidance calls for revenue to grow 10% to $3.3 billion in 2012.
That's too low.
Keep in mind that Sirius XM is already planning to juice its monthly rate by 12% next month. I realize that a lot of existing subscribers will still be on the books paying the lower current rate, but let's get a little more specific. If we go by the actual starting line -- going with the annual run rate implied by the $786.5 million that analysts are targeting in revenue for this year's final quarter -- we're talking about revenue growth of just shy of 5%. And, yes, it's fair to do exactly that because the rate hike should kick in early in 2012.
Even if half of Sirius XM subscribers don't wind up paying the new rates next year, are we to assume that net subscriber growth won't continue? The economy is getting better. Auto sales will improve. The product is also getting better.
The surprisingly profitable Pandora (NYSE: P ) may be a thorn in Sirius XM's side as more new cars allow smartphone owners to seamlessly stream through their dashboard, but there are things that satellite radio can do that streaming sites and terrestrial radio will never be able to match or afford.
Save for one time in late 2008 as the economy was falling to pieces, CEO Mel Karmazin has been conservative in his guidance. He's doing it again, and Sirius XM shareholders will benefit.
Back to the future
Cheaper iPads? A Netflix comeback? Sirius XM outpacing the company's own outlook? These are the limbs that I don't have a problem going out on. How can these things not happen in 2012?
It's time to start thinking about next year, and what it means for your portfolio. You do want to beat the market next year, right? While we're at it, have you already checked out The Motley Fool's top stock for 2012? The report is free -- like this article -- but it won't be around forever, so check it out now.