3 Predictions for This Week

I went out on a limb last week and came back with mixed results.

• I predicted that Google (Nasdaq: GOOG) would beat Wall Street's profit targets. The world's largest dot-com doesn't issue financial guidance, but it rarely misses. Well, it missed. Big G's adjusted profit climbed just 9%, well short of the 20% pop that the pros were forecasting. I was wrong.
• I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average (INDEX: ^DJI). It's been a good month for tech stocks, and January has historically been good for growth stocks. Well, despite a Friday surge by the typically stodgy Dow components, Nasdaq's healthy 2.8% gain during the abridged week narrowly bested the 2.4% pop in the Dow. I was right.
• My final call was for IBM (NYSE: IBM) to blow past analyst bottom-line estimates the way that the tech bellwether has over the past year. You have to go back nearly five years to find the last time that Big Blue has not bested the prognosticators. IBM's quarterly net income of $4.71 a share sprinted past analysts perched at $4.62. I was right.

Two out of three? I know that 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. Shares of Netflix will fall on Thursday
I'm a Netflix (Nasdaq: NFLX) bull. I've been a shareholder for nearly 10 years. I've relished the stock's 61% rally since bottoming out two months ago. I believe that the bear thesis is flawed, underestimating the advantage of Netflix's sizable streaming audience.

However, I'm still not blazingly confident heading up to Wednesday afternoon's quarterly report.

I believe that the defections have now stabilized, but I think the fourth quarter could've been a thorny mess. Analysts have gone from predicting a fourth-quarter profit of $1.09 a share three months ago to a more somber $0.55 a share today. Given the problematic churn and Netflix's warnings of actual deficits early in 2012, I think analysts haven't taken down that target down to as low as it should be.

When you pair that up with a stock that has largely rallied in recent weeks, it sets up the perfect storm for at least a minor sell-off come Thursday on the report.

2. The Nasdaq Composite will once again beat the Dow this week
Netflix aside, there's no reason to abandon the tech-heavy Nasdaq now.

Both market gauges have delivered three strong weeks to kick off 2012, but I think Nasdaq companies will continue to outperform the blue chips on the Dow Jones Industrial Average.

This pick has served me right during the past couple of weeks, and there's no reason to jump ship now.

3. Coach will beat Wall Street's earnings estimates
This may seem like a bad time to be a bull on a maker of designer handbags and other posh accessories. The economy's still struggling. Upscale jewelers have recently disappointed.

However, Coach (NYSE: COH) has found a way to stay ahead of Mr. Market. You have to go all the way back to the summer of 2009 to find the last time that Coach didn't beat analysts on the bottom line.

If analysts say that the company earned $1.15 a share in its latest quarter, I'll whip out a "greater than" sign. 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 Coach's earnings reports.

Source: Thomson Reuters.

Everything seems to be falling in place for another strong quarter out of Coach on the bottom line.

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

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