3 Stock Predictions for the Week Ahead

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

  • I predicted that OCZ Technology (Nasdaq: OCZ  ) would lose more money than analysts were expecting. The pros were targeting a deficit of $0.15 a share out of the maker of solid-state drives. Well, in a press release last month, the company had promoted its conference call as taking place on Oct. 3, but the report has now been bumped up to next Wednesday. So I wasn't right, but I wasn't wrong. We'll have to wait and see on this one.
  • I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average. (INDEX: ^DJI  ) . This was a consistent winning call during the first quarter, but it's been hit or miss during the past few months. The market had a positive run, with the tech-heavy Nasdaq climbing 0.6% higher. The Dow managed to roughly double that return, closing out the week with a 1.3% gain. I was right.
  • My final call was for Xyratex (Nasdaq: XRTX  ) to beat Wall Street's profit target. The enterprise-data storage specialist has been landing ahead of market profit expectations consistently over the past year. Well, Xyratex's quarterly profit of $0.37 a share fell well short of the $0.44 the pros were projecting. I was wrong.

I was 0-for-2, and that's not good.

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. Sirius XM will close lower on the week
Sirius XM Radio (Nasdaq: SIRI  ) hit a four-year high on Thursday. A pair of favorable analyst moves -- highlighted by the initiation of coverage by Bank of America Merrill Lynch's Jessica Reif Cohen with a $3.75 price target -- pushed the stock higher.

The stage is set for another interesting week for Sirius XM, as its CEO speaks at the annual investor meeting for the company that owns a nearly 50% stake in the satellite-radio provider. So much can go right, but Sirius XM has a peculiar way of retreating after hitting fresh highs.

I'm a Sirius XM bull. I see the stock higher in the future. However, I have no problem expecting Sirius XM to take a step back in the week ahead before it gathers momentum to mount a new rally toward fresh multiyear highs.

2.The Nasdaq Composite will beat the Dow this week
Betting on tech over stodgy blue chips was a steady winning bet for most of this year, and most of the names in the composite are still pretty 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, and that's my second prediction.

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

JB Hunt Transport Services (Nasdaq: JBHT  ) is a provider of transportation and destination services throughout North America. From refrigerated to dry, from rail to road, JB Hunt has the fleet in place to get products moving.

Another thing it does is make analysts look like perpetual underachievers. If analysts say the company earned $0.67 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

Q3 2011

$0.56

$0.57

2%

Q4 2011

$0.58

$0.61

5%

Q1 2012

$0.52

$0.57

10%

Q2 2012

$0.67

$0.67

0%

Source: Thomson Reuters.

Things can change, of course.

The trend through its most recent quarter was solid -- with JB Hunt beating profit targets by widening margins -- until merely proving mortal three months ago. There's also another grim trend with the way projections for its most recent quarter have been going. Wall Street was betting on net income of $0.69 a share three months ago. The average dropped to $0.68 last month, and to $0.67 more recently.

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.

Longtime Fool contributor Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. 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. The Motley Fool has a disclosure policy.


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