3 Predictions for This Week

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

  • I predicted that shares of Green Mountain Coffee Roasters (Nasdaq: GMCR  ) would rise on Thursday after its quarterly report. "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," I wrote at the time. Well, it was quite the quarter for the company behind the Keurig single-cup brewing platform. Revenue more than doubled. Earnings more than tripled. The stock rocketed 24% on Thursday. Wow! I was right.
  • I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average (INDEX: ^DJI  ) . January has been kind to the tech stocks that populate the Nasdaq, and strong earnings news from tech bellwethers helped Nasdaq edge out the Dow again. I was right.
  • My final call was for MasterCard (NYSE: MA  ) to blow past analyst bottom-line estimates the way the credit card marketer has done over the past few quarters. Well, MasterCard's quarterly net income of $4.03 a share sprinted past analysts perched at $3.91 a share. I was right.

Three for three? Awesome!

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 LeapFrog will rise on Friday
Toymakers are done counting their holiday winnings, and it's hard to imagine that LeapFrog Enterprises (NYSE: LF  ) feels jumpy about its performance.

The maker of electronic educational gadgets has a monster hit with its LeapPad tablet. The interactive learning toy was hot enough to be the most popular layaway item at the country's largest retailer by mid-November. Shortages in December found parents hitting the auction sites and paying twice the suggested retail price to make sure they had a LeapPad to give their kids.

Naturally, the insane demand means little if LeapFrog wasn't able to ultimately crank out enough to cash in. Why let the auction resellers have all of the fun? However, the LeapPad and its PC-downloadable apps make this a success story that will have legs for some time at LeapFrog.

The stock is back to where it was just before Christmas, when the company was often in the news, but I still see continued upside once the company reminds investors again about the potential here.

2. The Nasdaq Composite will once again beat the Dow this week 
I'm not superstitious, but repeating this call through most of January has paid off for me. There's really no reason to veer from that strategy now.

There are still a few tech names reporting here as we're wrapping up earnings season, and I still like those names more than I do the 30 blue chips on the Dow. Go, Nasdaq, go!

3. iRobot will beat Wall Street's earnings estimates
Robots haven't taken over the world, but they have improved the quality of our lives around the home and for soldiers on the battlefield.

iRobot (Nasdaq: IRBT  ) has won over consumers and members of the armed forces with its high-tech robotics. If you've ever seen the Roomba floor-vacuuming device, that's iRobot's handiwork. If you have ever seen footage of robots scouring Middle East terrain for roadside bombs, iRobot's Packbot is one of the major players in that niche. It's a cool business. It's also been a very profitable one for iRobot these days.

If analysts say the company earned $0.32 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 iRobot earnings reports.

Quarter

EPS Estimate

EPS

Surprise

Q4 2010 $0.14 $0.26 86%
Q1 2011 $0.23 $0.27 17%
Q2 2011 $0.21 $0.29 38%
Q3 2011 $0.26 $0.50 92%

Source: Thomson Reuters.

Everything seems to be falling in place for another strong quarter on the bottom line. And see that trend in the final column? The gap between where Wall Street is and where iRobot has been widening over the past couple of quarters. That's the prettiest sight that any investor heading into a quarterly report can see.

Well, there are your three predictions. Let's see how I fare this week.

If you 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 The Motley Fool's top stock for 2012? It's a free report, but only for a limited time, so check it out now.

The Motley Fool owns shares of MasterCard. Motley Fool newsletter services have recommended buying shares of iRobot and Green Mountain Coffee Roasters and creating a lurking gator position in Green Mountain Coffee Roasters. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He owns shares of Green Mountain and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. 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 February 09, 2012, at 2:49 PM, hello2012 wrote:

    You don't have any idea about what you are talking. Just QUIT!

  • Report this Comment On February 09, 2012, at 3:33 PM, hello2012 wrote:

    IRBT - Almost 33%, it is down. JUST quit MAN

  • Report this Comment On February 11, 2012, at 8:29 AM, TMFBreakerRick wrote:

    hello2012, the guidance for 2012 was brutal, and the stock was rightfully slammed. However, the prediction was ONLY for an earnings beat in Q4. Earnings of $0.38 a share > predictions of $0.32 a share. I'm certainly not pleased with the way the stock moved, but it was technically right.

    I still got two of the three predictions right -- and five of the past six over the past two weeks. Why quit?

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