As every year comes to a close, it's only natural for financial writers and analysts to crank out their expectations for the year that lies ahead.
I've been doing this for years, and I know that going out on a limb means that sometimes you are a rock star and other times the limb breaks and you come crashing down.
I did well in 2009, nailing all but one of my nine predictions. I bombed in 2010, though an article on five stocks that I predicted would beat the market won some third-party love after averaging gains of 95% last year.
This year just hasn't been my year.
In the spirit of full accountability, let's go over my four growth stock predictions for 2011. I may have nailed the first two, but whiffed badly on the other two calls.
1. Google will beat the market
After Google (Nasdaq: GOOG ) posted a small -- and rare -- decline in 2010, I figured that the world's leading search engine would bounce back.
The market was reading too much into some of its actions in 2010. Conceding China to Baidu (Nasdaq: BIDU ) on principle was only going to help its street cred globally. The search partnership of its two nearest stateside rivals would only give Google greater flexibility in winning over antitrust regulators.
"Things have to get better," I argued at the time. "Net income continues to grow, with earnings per share up nearly 30% through the first three quarters of 2010. When you combine that with the passing ship that is Big G's dwindling share price, we're looking at a tech darling with a forward earnings multiple in the teens."
Well, I was right. The stock is trading 6.6% higher with just four trading days left in the year. The S&P 500 is clocking in a mere 0.6% higher at this point.
However, Google's even cheaper now, since earnings are projected to climb 25% higher by the time 2011 is done. The search engine giant is now trading at just 14 times next year's profit target.
2. Sirius XM Radio will gain ground in 2011
There was no off year in 2010 for Sirius XM Radio (Nasdaq: SIRI ) . Shares of the satellite radio company more than doubled after popping fivefold in 2009.
"There are also several catalysts that could keep the gains coming," I argued late last year. "Keeping Howard Stern, the end of a three-year FCC-mandated moratorium on rate hikes, and the arrival of Sirius XM 2.0 will give Mr. Market some opportunities to reassess the stock's upside. The share gains won't be as ridiculously rich as investors experienced in 2009 and 2010, but I do see the stock closing at least marginally higher in an improving economy."
Well, Sirius XM's stock is up by a predictably more modest 11% this year, but that's more than enough to check this one off as the second and final pick I got right.
3. Netflix will also gain ground in 2011
Ouch! This call seemed pretty darn brilliant through July, as Netflix's (Nasdaq: NFLX ) shares nearly doubled.
Well, everybody knows how things fell apart after that. Between the ill-advised price increase, the Qwikster fiasco, the net subscriber cancellations, and the flick giant's profitless near-term guidance, Netflix has surrendered nearly 60% of its value this year.
"Wake me up when a real competitor arrives," I concluded at the time. "Until then, I'll concede that Netflix's valuation is stiff, but there's a wall of worry to climb in 2011."
Well, Humpty Dumpty had a big fall.
4. Apple will go 4-for-4
Calling for Apple (Nasdaq: AAPL ) to beat Wall Street's earnings estimates in all four of its fiscal 2011 periods seemed like the safest of my calls. What is now the world's most valuable tech company has been routinely trouncing the pros for years.
What could go wrong?
"Try to keep up, analysts," I taunted. "You probably won't."
I was looking good through Apple's first three fiscal quarters, but softer-than-expected iPhone sales during the company's fourth quarter produced a rare miss for the class act of Cupertino.
|
Quarter
|
EPS est.
|
EPS
|
Surprise
|
| Q1 2011 |
$5.40 |
$6.43 |
19% |
| Q2 2011 |
$5.37 |
$6.40 |
19% |
| Q3 2011 |
$5.83 |
$7.79 |
34% |
| Q4 2011 |
$7.39 |
$7.05 |
(5%) |
Source: Yahoo! Finance.
Oh well. Apple couldn't be immortal forever.
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