3 Predictions for This Week

I went out on a limb last week, and now it's time to see how that decision  played out.

  • I predicted that LDK Solar (NYSE: LDK  ) would lose more money than analysts were expecting. The maker of solar-energy products had come up short in each of the past four quarters, so it seemed like a safe bet. It was. Even though Wall Street was braced for a loss of $1.43 a share, LDK Solar wound up posting a deficit of $2 a share. I was right.
  • I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average (INDEX: ^DJI  ) . This has been a winning call lately, as faster-growing tech stocks outpace the Dow's 30 blue chips. The market was a bit weak last week, and this was a close one. The tech-heavy Nasdaq shed 0.13% of its value. However, the Dow managed to lose just 0.1% on the week. I was wrong.
  • My final call was for TIBCO Software (Nasdaq: TIBX  ) to beat Wall Street's profit target. The provider of infrastructure software solutions had landed ahead of the prognosticators consistently in recent quarters, but things didn't play out that way this time. TIBCO earned $0.27 a share, and that's exactly what analysts were expecting. I was wrong.

One 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. Research In Motion will lose more money than analysts are expecting
Things have been going pretty badly for Research In Motion (Nasdaq: RIMM  ) lately, and that was before Friday's widely publicized service outage.

The BlackBerry maker should have its hands full on Thursday, when it reports quarterly results. The market knows this won't be pretty, targeting a 40% plunge in revenue and a steep $0.47-per-share loss. It should be the second consecutive quarter that RIM posts a quarterly decline.

Well, I'm saying it will be uglier than even that. RIM has come up short in all but one quarter over the past year, and betting on a larger loss than Wall Street is forecasting makes sense.

2.The Nasdaq Composite will beat the Dow this week 
Betting on tech over stodgy blue chips was a steady winning bet for me earlier this year. This has been a losing bet lately, but I still think technology is the best sector to be invested in these days.

I'm going to stick with this pick. Most of the names in the composite are just too cheap at this point. 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.Actuant will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

Actuant (NYSE: ATU  ) is a provider of products and services for energy-related industries. From hydraulic and electrical tools and supplies to highly engineered position and motion-control systems, Actuant makes a lot of the gear that keeps companies productive.

Another thing it does is make analysts look like perpetual underachievers. If analysts say the company earned $0.54 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
Q4 2011 $0.46 $0.50 9%
Q1 2012 $0.43 $0.50 16%
Q2 2012 $0.38 $0.43 13%
Q3 2012 $0.59 $0.60 2%

Source: Thomson Reuters.

Things can change, of course. Companies can scale back their industrial operations, slowing orders at Actuant. However, there are no signs that the company will fumble this quarter to the point of failing to live up to Wall Street estimates. Everything still 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 TIBCO Software and Actuant. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He owns no shares in any of the stocks in this story 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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  • Report this Comment On September 24, 2012, at 5:04 AM, jrainspe wrote:

    1. Well DUH!

    2. Just a crap shoot, &

    3. We don't understand history well enough to identify all the stimuli and causes that go into the making of an 'event'. Only way we can safely say that history will repeat itself is to know all those causes and stimuli and make sure they are in place. Then we might have a shot at predicting a history repeat. However, there is still the matter of 'equivalent stimuli', i.e. a diferent stimulus that may produce he same result as another stimulus. Even if the stimuli are the same, at east as far as we can identify, we can never know all the 'correlations' between stimuli, both idetified and unidentified.

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