I went out on a limb last week and came out with mixed results.
- I predicted that shares of electronic-toy maker LeapFrog Enterprises (NYSE: LF ) would rise on Friday after its quarterly report. Its LeapPad was one of the hottest toys of the 2011 holiday shopping season. Well, it was a great report. Unfortunately, the stock fell 2% on Friday. It was a down day for the market in general, and shares of LeapFrog had rallied 22% over the eight prior trading days. I was wrong.
- I predicted that the tech-heavy Nasdaq (INDEX: ^IXIC ) would outperform the Dow Jones Industrial Average. It's been a strong year so far for tech stocks relative to the more diversified blue chips that make up the 30 Dow components. Nasdaq clocked in with a flat showing, and the Dow fell by 0.5%. I was right.
- My final call was for iRobot (Nasdaq: IRBT ) to blow past analyst bottom-line estimates the way that the robot maker has done over the past few quarters. Well, iRobot's quarterly net income of $0.38 a share sprinted past the analysts, who were perched at $0.32 a share. Weak guidance crushed the stock, I was right.
Two for 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 Zipcar will rise on Tuesday
It's been a disappointing run for Zipcar (NYSE: ZIP ) as a public company. The leading car-sharing service went public at $18 last April. The stock opened at $30 but has been largely riding in reverse ever since.
That's a shame, because Zipcar is one of the market's more dynamic companies. There are now 650,000 "Zipsters" who take advantage of renting cars by the hour with gasoline and insurance included. Zipcar is also parlaying its auto-usage mastery into providing municipalities with the software to manage their own city-owned car fleets.
Zipcar reports on Tuesday morning, and I don't see a Valentine's Day massacre. Yes, the competition is getting smarter. Rivals are slashing fees. Peer-to-peer car sharing is taking off. However, the stock has been beaten down so badly heading toward Tuesday's report that even a small whiff of good fumes could find the stock shifting back into drive again.
2.The Nasdaq Composite will once again beat the Dow this week
Am I going to the well one time too many? I've been sticking to this particular call all year, and the dice keep falling my way.
I just believe that this market is ripe for the tech-stacked secondary stocks to outpace the 30 mega-caps that make up the Dow Jones Industrial Average. Go, Nasdaq, go!
3. Baidu will beat Wall Street's earnings estimates
China's leading search engine reports on Thursday.
It's easy to warm up to Baidu (Nasdaq: BIDU ) . The dot-com darling has been a speedster at a time when stateside search engines are posting merely modest growth. China's potential is undeniable, and the world's most populous nation is still early in its cyberspace migration.
Sure, there are plenty of reasons to be wary about Chinese equities, given the nation's restrictive government, but the heady growth is difficult to ignore.
"That's the only Chinese stock that I like," Jim Cramer told Mad Money viewers last week when asked about Baidu.
If analysts say that the company earned $0.91 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 at Baidu.
| Quarter |
EPS Estimate |
EPS |
Surprise |
| Q4 2010 |
$0.45 |
$0.50 |
11% |
| Q1 2011 |
$0.45 |
$0.47 |
4% |
| Q2 2011 |
$0.66 |
$0.72 |
9% |
| Q3 2011 |
$0.83 |
$0.84 |
1% |
Source: Thomson Reuters.
Everything seems to be falling in place for another strong quarter on the bottom line.
Sure, I realize that Baidu barely landed ahead of the pros last time out. This is a good sign that Wall Street is starting to catch up to the company. Analysts have also bumped their target higher -- from $0.88 to $0.91 a share -- over the past year.
Still, it's hard to slow down the Baidu locomotive.
Three for the road
Well, there are three predictions right there. Let's see how I fare this week.
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