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 SodaStream (NASDAQ: SODA  ) would close out the week higher. The company behind the popular beverage system that turns flat water into sparkling soft drinks was set to report its quarterly results, and SodaStream has historically served up market-thumping results. It was a solid report, but the market wasn't impressed after the stock's healthy gains leading up to report. Shares of SodaStream slipped on the week. 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? After seven weeks of stock gains, some of the major exchanges were finally mortal this time. The Nasdaq closed 0.9% lower. The Dow, on the other hand, managed to clock in with a slight gain of 0.1% on the week. I was wrong.
  • My final call was for Yandex (NASDAQ: YNDX  ) to beat Wall Street's quarterly profit target. The leading search engine in Russia has been growing quickly, blowing through Wall Street's bottom-line forecasts with ease over the past year. Analysts were looking for a profit of 8.65 Russian rubles, and the dot-com speedster came through with net income of 8.82 a share. 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.Sturm, Ruger will shoot higher on the week
Sturm, Ruger (NYSE: RGR  ) reports its latest quarterly results on Wednesday, and a strong showing is practically a given. No matter where you stand on the gun control debate, it's clear that there's a run on firearms these days. Gun owners don't want to be left empty-handed if gun restrictions dramatically tighten.

Sturm, Ruger has also been blasting through analyst estimates with ease in recent quarters, so it's not as if an upward move would really be much of a surprise anyway.

There will naturally be long-term concerns for all firearm makers. The ramifications of the very topic being put up for debate are real. However, it's hard to get in the way of a rallying stock when it's likely to deliver good news in a few days. My first call is for Sturm, Ruger to close the week higher.

2.The Nasdaq Composite will beat the Dow this week
Tech has been a big winner in recent years, so betting on tech over stodgy blue chips has been a good bet for me more often than not.

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

When it comes to online travel, priceline.com (NASDAQ: PCLN  ) is the niche's shooting star. Priceline has evolved from its roots as a portal where folks would submit low bids on hotels and air fares, only to be turned down five times out of every six requests. Sure, Priceline still offers the "name your own price" platform, but it's now a more full-featured travel website with a growing global presence.

Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $6.54 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

$5.05

$5.37

6%

Q1 2012

$3.95

$4.28

8%

Q2 2012

$7.36

$7.85

7%

Q3 2012

$11.81

$12.40

5%

Source: Thomson Reuters.

Things can change, of course. Europe continues to be a weak market, and Priceline has a very strong presence there. Consumers may be hesitant to travel, and companies may be reluctant to commit to corporate treks.

Then again, you have to go all the way back to 2006 to find the last time the online travel giant hasn't beaten Wall Street's quarterly earnings projections. 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.

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


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  • Report this Comment On February 25, 2013, at 10:48 AM, MinWageMaxGains wrote:

    You keep saying "One out of three? I can do better than that," but you rarely ever do. Shame on me for continuing to sometimes check in.

  • Report this Comment On February 26, 2013, at 5:19 PM, TMFBreakerRick wrote:

    Seriously? The past three weeks have been 2 out of 3, 2 out of 3, and 3 out of 3. I have definitely had a few 1s and even some 0s along the way, but you should go back a few weeks to score things appropriately.

  • Report this Comment On February 27, 2013, at 6:03 PM, colpuck wrote:

    I picked up some $RGR on an earnings play. They just beat expectations, so I am happy.

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