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 Facebook (META 2.98%) would close higher on the week. The leading social-networking website operator had scheduled an event for this past Tuesday. I was expecting it to be special, but apparently so were way too many other investors. In a textbook case of "sell on the news," Facebook shares slipped after the dot-com giant introduced Graph Search. It's going to be a great addition to the website, but the market was apparently holding out for more. Facebook's stock took a 6% hit on the week. I was wrong.
• I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average. (^DJI 0.69%). This has been a tricky call lately, so how did it play out this time? Well, the Nasdaq closed 0.3% higher. The Dow, on the other hand, clocked in with a gain of 1.2% on the week. I was wrong.
• My final call was for NetScout (NTCT 2.35%) to beat Wall Street's quarterly profit target. Last year, the website uptime specialist surpassed analyst income projections all year long, so it was easy to bet on more of the same. Analysts were looking for a profit of $0.35 a share. NetScout came through with net income of $0.36. The report was disappointing on other levels, but the company still got a bottom-line beat. I was right.

One out of three? Yikes! I know that 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.Apple will close out the week higher
Apple (AAPL 0.64%) hasn't been a very popular stock lately. Shares of the iEverything company closed out the week at exactly $500. It's now 29% below its all-time high set just four months ago.

This is going to be a challenging week for Apple. Analysts see the world's most valuable tech company posting a year-over-year decline in profitability for the first time in ages. Analysts have been slashing iPhone and iPad sales targets, as cheaper Android devices have taken over the smartphone and, to a lesser extent, tablet markets.

But this is Apple we're talking about. Even with its back is against the wall, it should find a way to soothe investor fears, and possibly even offer up a growth catalyst or two that the market has ignored. I don't think we may necessarily see a great report, but I do expect a bounce either way. Apple is too important -- and too cheap -- to not move higher.

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 in 2012. 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, and they'll be reporting quarterly results in the coming days. 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. Netflix will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

Netflix (NFLX 4.17%) runs the popular streaming video service that nearly 30 million people enjoy worldwide. It has had its shares of knocks and detractors since its share price peaked two summers ago, but no one has come close to even competing against Netflix.

Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a deficit of $0.12 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. Netflix has been spending a lot of money on content deals and expanding overseas. It also stopped reporting its churn numbers several quarters ago, and that has led many to believe that the subscriber turnover for streaming is a lot higher than it was historically for its DVD-based rental service. However, Netflix came through with a narrower loss the last time it warned investors to brace for red ink.

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.