3 Predictions for Next Week

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

• I predicted that Best Buy (BBY -0.81%) would earn less than what Wall Street was expecting. Even though analysts were already expecting the consumer-electronics chain to earn a sliver of what it rang up a year earlier, the $0.12-per-share profit seemed to be too much for a retailer that's reeling as a new CEO tries to turn the superstore chain around. That's exactly how things played out. Best Buy posted an adjusted profit of only $0.03 a share. I was right.
• I predicted that the Nasdaq would outperform the Dow Jones Industrial Average. (^DJI -0.11%). The market bounced back in a major way during the holiday-shortened Thanksgiving trading week, and the tech-heavy Nasdaq closed 4% higher, ahead of the Dow's own healthy 3.3% increase. I was right.
• My final call was for Diana Shipping (DSX -1.03%) to beat Wall Street's profit target. The dry bulk container shipper has been beating the market consistently over the past year, so this one seemed like an easy bet. Sure enough, Diana Shipping's profit of $0.15 a share was just ahead of the $0.14 analysts were expecting. I was right.

Three out of three? Awesome!

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.Tiffany will earn less than Wall Street is expecting
The economy is showing some signs of life, but is it enough to move some bling? Tiffany (TIF) has been in a funk lately, falling short of analyst profit forecasts in each of the three previous quarters. Then tack on uninspiring reports from a notable peer: Zale (NYSE: ZLC) shares were pounded on Wednesday after a disappointing quarter.

Sure, Tiffany aims for a slightly higher caliber of jewelry shopper than Zale does, but that kind of news isn't what you want to hear heading into a report where Wall Street's betting on a profit of $0.63 a share.

My first prediction is that Tiffany will earn less than that.

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. Guidewire Software will beat Wall Street's earnings estimates
Some stocks are just flat out better than others.

Guidewire Software (GWRE -0.24%) is a provider of enterprise software solutions for the property and casualty insurance industry. It went public in January at $13 and has been one of this year's hottest IPOs by more than doubling in value.

Another thing it does is make analysts look like perpetual underachievers. If analysts say the company earned $0.01 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.

Source: Thomson Reuters.

Things can change, of course. There are concerns about how enterprise software companies in general are faring during this iffy economic climate. However, the property and casualty insurance industry has been pretty steady in all environments. Everything seems to be falling into place for another market-thumping quarter on the bottom line.

Three for the road
Well, there are three predictions right there. Let's see how I fare this week.

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