3 Predictions for This Week

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

  • I predicted that shares of Ebix (Nasdaq: EBIX  ) would grow its earnings -- even though analysts were targeting a slight decline in profitability. The provider of cloud-based software solutions for the insurance industry had a two-year streak of beating expectations, so a beat seemed like the smart bet. Ebix came through with net income of $0.44 a share, ahead of the $0.42 a share it earned last year. I was right.
  • I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average (INDEX: ^DJI  ) . 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, but last week was strong for both market metrics. Nasdaq clocked in with a healthy 2.2% gain, but that was surpassed by the Dow's 2.4% ascent. I was wrong.
  • My final call was for Vera Bradley (Nasdaq: VRA  ) to pack its stylish bags and travel past the pros on the bottom line. Well, the stock took a hit on a mixed report, but net income of $0.50 a share was more than enough to beat out the pros at $0.47 a share. I was right.

Two out of three? 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. SAIC will close out the week lower
SAIC (NYSE: SAI  ) needs a good offense. Analysts see revenue and profitability dipping slightly for the defense contractor when it reports it quarterly results on Tuesday.

Obviously the marginal year-over-year dips are baked into the stock already. It will take either a soft market or a softer report to unhinge the stock. Well, here's where it pays to lean on recent history. SAIC has fallen woefully short of Wall Street profit forecasts in each of the past two quarters.

Until proven otherwise, momentum is not on SAIC's side heading into Tuesday's moment of truth.

2.The Nasdaq Composite will once again beat the Dow this week 
Betting on tech over stodgy blue chips has been a steady bet for me all year. The market is ripe for the tech-stacked secondary stocks to continue to outpace the 30 megacaps that make up the Dow Jones Industrial Average.

3. Discover Financial Services will beat Wall Street's earnings estimates
It pays to swipe plastic these days. The holidays were good to the country's largest credit card marketers, and now it's time for Discover Financial Services (NYSE: DFS  ) to show us how it fared.

If analysts say that the company earned $0.90 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.

Quarter

EPS Estimate

EPS

Surprise

Q1 2011 $0.60 $0.84 40%
Q2 2011 $0.75 $1.09 45%
Q3 2011 $0.96 $1.18 23%
Q4 2011 $0.92 $0.95 3%

Source: Thomson Reuters.

Things can change, of course. We live in times where extending credit -- even in credit card form -- has become the province of stingy lenders. It's also possible that Discover could miss out even as its larger peers have reported robust holiday quarters.

The economy doesn't seem to be slipping again, though. Folks are doing plenty of shopping. Everything seems to be falling into place for another strong quarter on the bottom line.

Three for the road
Well, there are three predictions right there. 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.

Motley Fool newsletter services have recommended buying shares of Ebix. 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 Ebix 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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