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 Baidu (BIDU -0.64%) would move higher on the week. China's leading search engine had gotten too cheap -- trading for less than 13 times next year's projected earnings -- and it seemed value investors wouldn't let this growth company get even more inexpensive. The markets did close marginally lower, but Baidu bucked the trend by climbing 1.7% higher on the week. I was right.
• I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average. (^DJI -1.53%). This has been a tricky call lately, so how did it play out this time? It was one of the closest finishes in a long time. The Nasdaq and the Dow both closed with marginal losses. The tech-heavy Nasdaq inched 0.1% lower on the week, but the Dow managed to lose even less than that. I was wrong.
• My final call was for Franchesca's Holdings (FRAN) to beat Wall Street's quarterly profit target. The fast-growing operator of clothing boutiques has been a serial outperformer, blowing through Wall Street's bottom-line forecasts with ease over the past year. Analysts were looking for a profit of $0.30 a share during the quarter, and it came through with net income of $0.33. The market liked the report, sending the retailer's stock 7.4% higher on the week. I was right.

Two out of three? 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.JA Solar will post a wider loss than Wall Street is expecting
These have been challenging times for solar energy companies, and few have felt the pain as badly as JA Solar (NASDAQ: JASO). A couple of years ago, the maker of solar cells was very profitable, but JA Solar's been losing money since the summer of 2011. The worst part is that it's been posting larger deficits than Wall Street's been expecting.

This is a problematic trend, and even though analysts see JA Solar reporting a massive shortfall of $1.53 a share, the trend suggests that JA Solar's loss will be even larger. My first prediction is that JA Solar's report on Monday morning shows a greater deficit than analysts are forecasting.

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 past 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. Mattress Firm will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

When it comes to bedding retailers, Mattress Firm (NASDAQ: MFRM) is a sleeper pick. It's been acquiring smaller mattress sellers, taking advantage of its economies of scale to consolidate a fragmented retail niche. As bad as the economy can get, it's hard to put up with a lumpy mattress. Mattress Firm may have run into some challenges lately, but it continues to grow its empire at a heady pace.

Another thing it does is make analysts look like perpetual underachievers. If analysts say that the company posted a profit of $0.32 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. Furniture stores and even some department-store chains are selling mattresses these days. Consumers can also hold back on buying new beds, especially now after this year's end of the payroll tax stimulus is giving homeowners less money to spend on things. Analysts also see profitability challenged at this point in Mattress Firm's growth cycle.

It's not comforting to see Mattress Firm barely beat the pros in its most recent quarter. However, it's hard to argue against the company until this trend reverses. 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.