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 Apple (NASDAQ: AAPL  ) would close higher on the week. The consumer tech giant was heading into an uncertain holiday quarter report, but the stock had shed nearly 30% of its value since peaking four months earlier. The report was disappointing, and Apple's shares took a hit. After two strong trading days, the stock cratered on Thursday and Friday. The end result was a brutal 12% drop for the stock that no longer commands the largest market cap in the country. I was wrong.
  • I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average. (DJINDICES: ^DJI  ) . This has been a tricky call lately, so how did it play out this time? Well the Nasdaq closed 0.5% higher despite Apple's precipitous drop. The Dow, on the other hand, clocked in with a gain of 1.8% on the week. I was wrong.
  • My final call was for Netflix (NASDAQ: NFLX  ) to beat Wall Street's quarterly profit target. The video service held up well the last time that it was targeting a quarterly loss, and the value proposition of paying $7.99 a month for its growing streaming catalog is unmatched. Analysts were looking for a deficit of $0.13 a share. Netflix came through with net income of $0.13 a share. 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. Research In Motion will close out the week lower
Research In Motion (NASDAQ: BBRY  ) investors have been circling Wednesday on the calendar for a long time. The smartphone pioneer is unveiling BlackBerry 10 on Wednesday, and the shares have rallied in anticipation.

The glimpses of BB10 that the company provided last year were promising, but is it enough to undo Android's momentum? If even Apple's iOS is struggling and the heavily financially backed Windows Phone 8 rollout in the fall didn't generate much of a buzz, why should a fading mobile platform make things interesting?

We don't know, and we really won't know this week. If RIM shares drop this week, that's just a sign that the stock that has run up too high, too soon. Even if BB10 does turn enough heads to ultimately get RIM back on the map, the "buy on the rumor, sell on the news" speculators who have bid up the stock since last year's bottom will start bailing to lock in their gains.

Let's call this one a long squeeze.

2. The Nasdaq Composite will beat the Dow this week
Betting on tech over stodgy blue chips was a steady winning bet for me last 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, and the results this earnings season aren't as bad as some worrywarts had feared. 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. MasterCard will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

MasterCard (NYSE: MA  ) is the credit card marketer that may be well represented in your wallet. Credit card marketers cash in on transaction revenues without taking on the credit risks that the issuing banks take on.

Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a deficit of $4.82 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

$3.91

$4.03

3%

Q1 2012

$5.30

$5.36

1%

Q2 2012

$5.57

$5.65

1%

Q3 2012

$5.92

$6.17

4%

Source: Thomson Reuters.

Things can change, of course.

This new year will be challenging, especially as shoppers ease up on the plastic after seeing their paychecks shrink in the face of higher Social Security taxes following a two-year reprieve. However, that's a 2013 problem. For now we're looking at the tail end of 2012, and it appears to have been a strong holiday quarter from a consumer perspective.

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.

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (11) | Recommend This Article (10)

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 January 27, 2013, at 3:57 PM, voytekp wrote:

    @InfoThatHelp - you know I'm yet to see something helpful from you....

    Why choose such user name if all you do is bash everything without any good information to support it?!?!?!?!?

    Change your name to InfoThatBash and I'll understand

  • Report this Comment On January 27, 2013, at 6:59 PM, Arthur1111 wrote:

    The Motley Fool always gets things wrong. That is why they are fools. RIMM will spike next week.

    The fools along with the infogarbage will comes back the week after and predict another decline for RIMM. RIMM of course will beat them again. But, the fools and the infogarbage will come back a 3rd week and predict the same thing.

    These guys have no respect for what they say, that is why the fools along with the infogarbage have been stating the same thing over and over and over.

  • Report this Comment On January 27, 2013, at 7:42 PM, jelp2 wrote:

    The only ones saying RIM will close lower are those trying to cover their shorts, disgruntled experience employees and Apple fanboys worried about new technology.

    RIM will definitely spike next week easily to mid twenties and in the following weeks even more when the shorts have to cover.

    Now that's some info that helps!!!

  • Report this Comment On January 27, 2013, at 7:45 PM, jelp2 wrote:

    ^^^^^^That should be ex employees...this stupid iPhone has awful auto correct.

  • Report this Comment On January 27, 2013, at 8:28 PM, CZZZZZZ wrote:

    Well the Fool is consistent,they missed the last 200% gain with RIMM and are still trying to drive it down.

    I love watching these incomptent analysts squirm as the try to cover their dumb Short positions by drumming up fear scenarios, especially with their precious apple stock tanking and teenagers abandoning it, it couldnt happen to a more deserving bunch...looking forward to the coming short squeeze, it will be beautiful !

  • Report this Comment On January 27, 2013, at 9:41 PM, verces wrote:

    To 180k followers / investors of Motley Fool- APPL is done and they are now working on spending their billions to create a smartphone that will compete with BB10. Thats always the game anyways.

    People like to hear an underdog stories and RIM was one of them. The story of RIM will unfold a second chapter with great success. Why? Because Mike is still their visionaries...its like when Steve Jobs made an attempt to revive Apple by creating a product that puts the compettitor a few years behind. Mike with BB10 is going to do the same and now with the help of Thornton, I'm pretty sure this is going to be a Godly comeback for RIM.

    For those non believers especially the Canadians. Wake up folks, i'm an Iphone users too but definitely will be one of early adopters for BB10.

    Here are a few reasons:

    1. RIM needs to hire back those Canadian workforce after a slump in sales and I have a few friends there actually.

    2. Native DLNA and HDMI connectivity - You can easily connect your BB10 with its HDMI cable to bigger screen to do presentations or simply just to watch the video or pictures slide from BB10. And the most amazing part DLNA...how about controlling any WiFi connected devices with your BB10. No smartphones available can do this at present time.

    3. NFC Capability - Secured and plastic less credit card. This will not only save you from any fraudulent card issues but tons of carbon footprint too to minimize our impact in the environment.

    4. Blackberry Balance - Means having 2 in 1 smartphone , for sure competition can copy it but thats at least a year or 2 in development efforts.

    5. Hub, Peek and Flow - Excellent engineering work and innovation, at least now you can multi task with your smartphone.

    There are a few more innovations in this phone that outpaced the current smartphones in the market but what really compelling is, most of my friends teenage kids have this iPhone device and I'm really got to ship to smarter phones!!!

  • Report this Comment On January 27, 2013, at 9:44 PM, digitally404 wrote:

    "why should a fading mobile platform make things interesting"... It's not a fading platform.

    It's the newest, freshest, and arguably the best OS to hit the market since 2009.

    How can you make long/short calls if you can't get the facts straight?

  • Report this Comment On January 27, 2013, at 10:01 PM, TimKnows wrote:

    InfoThatSucks - same garbage different day! Thank!

    You got RIM wrong, it is what you don't know about RIM that will prove you wrong again.

    Apple is dead.

  • Report this Comment On January 28, 2013, at 2:31 AM, TimKnows wrote:

    InfoThatSucks - at it again.

  • Report this Comment On January 28, 2013, at 6:02 AM, castech97 wrote:

    Unless the pre-release specs and beta phones were a complete misrepresentation, RIMM will have the best phone on the market in 2013 - not by just a little, either. Unfortunately, that may leave Apple hurting for another few quarters.

    I'm already in line for a Blackberry - bigger crisper screen, a touchboard that actually works, smarter FASTER O/S - why would anybody want to pay more for a lesser phone?

  • Report this Comment On January 28, 2013, at 6:12 AM, castech97 wrote:

    BTW ~ the isn't to say the old iPhone 5 will just croak and disappear overnight; the iPhones will be around for some time to come. For instance i'm donating mine to my teenage niece.

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