3 Predictions for This Week

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

  • I predicted that Research In Motion (Nasdaq: RIMM  ) would lose more money than the $0.47 a share that analysts were expecting. Well, Friday's pop in the stock of the BlackBerry maker should tip you off as to how that prediction played out. RIM did lose money for the third consecutive quarter, but it was a lot less red ink than the market was forecasting. I was wrong.
  • 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 weak last week. The tech-heavy Nasdaq shed 2% of its value. However, the Dow managed to lose just 1.1% on the week. I was wrong.
  • My final call was for Actuant (NYSE: ATU  ) to beat Wall Street's profit target. The provider of products and services for energy-related industries had landed ahead of the prognosticators consistently in recent quarters. Actuant earned $0.55 a share, narrowly beating the analysts were expecting. I was right.

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.OCZ Technology will lose more money than analysts are expecting
There are a few reasons the $0.15-a-share deficit that Wall Street is forecasting out of OCZ Technology (NYSE: OCZ  ) may be a bit generous.

For starters, the maker of solid-state drives has come up short on the bottom line in three of its past four quarters. OCZ also warned of disappointing quarterly results this summer, and that's weighing down the analysts.

Wall Street saw OCZ breaking even for this quarter three months ago. The target was a deficit of $0.06 a share a month ago, and it's up to $0.15 now. The trend is working against OCZ, so I'm betting on a larger loss than Wall Street is forecasting here.

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 as we kick off the fourth quarter.

3.Xyratex will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

Xyratex (Nasdaq: XRTX  ) is a data-storage specialist. Its hard disk drive capital equipment lets disk-drive makers and their suppliers meet productivity requirements.

Another thing it does is make analysts look like perpetual underachievers.

If analysts say that the company earned $0.44 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 $0.17 $0.42 147%
Q1 2012 $0.33 $0.73 121%
Q2 2012 $0.26 $0.40 54%
Q3 2012 $0.29 $0.32 10%

Source: Thomson Reuters.

Did you catch the trend? It was blowing Wall Street clear out of the water a year ago, but the pros have drawn closer with every passing quarter. Xyratex also toils away in an industry that's susceptible to slowdowns in corporate technology spending.

But that shouldn't matter. 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 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.


Read/Post Comments (4) | Recommend This Article (11)

Comments from our Foolish Readers

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 September 30, 2012, at 3:33 PM, velo15 wrote:

    OCZ moved earnings to Oct 10.... A week early but not a bad prediction,,, sadly for me.

  • Report this Comment On September 30, 2012, at 3:48 PM, trysson wrote:

    Is the reason for the move: BAD NEWS CAN'T WAIT?" Nothing seems to be going right for OCZ lately.

  • Report this Comment On September 30, 2012, at 9:02 PM, drbldr wrote:

    I'm a XRTX fan, but I can't figure out how they can beat, or even match the $.44 estimate. XRTX told us their revs and gross margin. This should bring in an operating income of about $50 million. Unless they've substantially cut costs since the last quarter, they will likely miss. If their costs are similar to previous quarters, they should be at about $5-6 million pre tax. Barring a major tax benefit, they will probably be in the $.10 - .20 range. All this said, I am a believer in XRTX for the longer term. They have a solid balance sheet and continue to get over the hurdles created by the recession and turbulent drive business.

  • Report this Comment On October 01, 2012, at 12:16 AM, bazyOCZ wrote:

    OCZ losing more is given and priced in, but they report on the 10th.

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