3 Predictions for This Week

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

  • I predicted that shares of Netflix (Nasdaq: NFLX  ) would fall on Thursday after its quarterly report. I'm a bull and longtime shareholder, but I figured the company wasn't completely over last year's collapse. I couldn't have been more wrong. Netflix may have shed a ton of DVD-based subscribers but streaming and overall unique accounts climbed to record levels. Netflix's stock soared 22% on Thursday after its robust fourth quarter. I'll be honest. My portfolio didn't mind me missing badly on this call.
  • 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, strong earnings news from tech bellwethers helped NASDAQ edge out a flattish Dow. I was right.
  • My final call was for Coach (NYSE: COH  ) to blow past analyst bottom-line estimates the way that the designer handbag and accessories maker has done since the summer of 2009. Coach's quarterly net income of $1.18 a share sprinted past analysts perched at $1.15 a share. 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 Green Mountain will rise on Thursday
Shareholders were in for a rude awakening when Green Mountain Coffee Roasters (Nasdaq: GMCR  ) reported uninspiring quarterly results last time out.

The "I told you so" chorus of bears won out, and the company behind the Keurig single-cup brewers saw its stock get brewed.

There have been conflicting analyst reports on the state of single-cup coffee in general and Green Mountain in particular over the holidays, but my money's on the bulls taking the next round. Green Mountain will have some patent expirations to tackle later this year, but for now, I see Green Mountain resuming its winning ways and silencing the cynics.

2.The NASDAQ Composite will once again beat the Dow this week
I realize that secondary stocks won't outmuscle the 30 Dow components week after week, but this is a call that hasn't let me down yet this fine young year.

Why jump ship now?

There are still a few tech names reporting here as we're smack-dab in the heart of earnings season. Go NASDAQ. Go!

3. MasterCard will beat Wall Street's earnings estimates
Consumers may be stingy, but it's hard to be a tightwad during the holidays.

MasterCard (NYSE: MA  ) surely must have had a rocking good quarter as we continue to move toward a somewhat cashless society.

Don't worry about the deadbeats. Remember that MasterCard is simply a credit card marketer. It's the issuing bank that's taking on the credit risk here. MasterCard is simply there to help along the transactions and collect its juicy piece of the action.

If analysts say that the company earned $3.93 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 earnings reports.

  EPS est. EPS Surprise
Q4 2010 $3.04 $3.16 4%
Q1 2011 $4.10 $4.29 5%
Q2 2011 $4.23 $4.76 13%
Q3 2011 $4.82 $5.63 17%

Source: Thomson Reuters.

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

See that trend in the final column? The gap between where Wall Street is and where MasterCard ultimately lands is widening. That's the prettiest sight that any investor heading into a quarterly report can see.

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

If you'd like to stay on top of what happens next -- and I'm guessing you do because you're reading this article -- how about checking out Motley Fool's top stock for 2012? It's a free report, but only for a limited time so check it out now.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Netflix and Green Mountain. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

The Motley Fool owns shares of Coach and MasterCard. Motley Fool newsletter services have recommended buying shares of Netflix, Green Mountain Coffee Roasters, and Coach. Motley Fool newsletter services have recommended creating a lurking gator position in Green Mountain Coffee Roasters. 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.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 30, 2012, at 4:59 PM, stanton43 wrote:

    I hope you are correct with your call on GMCR. I bought in recently at $49 and change, and have been waiting patiently for an upward move.

  • Report this Comment On February 03, 2012, at 2:00 PM, TMFBreakerRick wrote:

    Stanton, I don't know if you'll check back -- but -- yes, given the stock's nearly 24% pop on Thursday I definitely nailed that prediction. Congrats to you.

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