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 plunged below $400 last week on fears that this week's quarterly report would be a disaster. Guidance for the current quarter is terrible, but an otherwise reasonable fiscal second quarter and Apple's move to beef up its dividend and share buyback helped draw in bargain hunters. The stock soared 6.8% higher. I was right.
  • 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 market bounced back this week, and secondary stocks were leading the way. The Nasdaq rose 2.3% on the week. The Dow managed to close just 1.1% higher. I was right.
  • My final call was for Lumber Liquidators (NYSE: LL  ) to beat Wall Street's quarterly profit target. The leading retailer of hardwood flooring has been growing quickly and making the most of homeowners who are finally feeling comfortable enough to invest in upgrading their digs. Analysts were looking for a profit of $0.42 a share during the quarter, and it came through with adjusted net income of $0.57. I was right.

Three for three? Perfect!

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. Sirius XM will close higher on the week
Sirius XM Radio (NASDAQ: SIRI  ) reports on Tuesday morning, and it's easy to bank on a strong report. Auto sales have been strong in recent months, and that's the lifeblood of new subscribers for the satellite-radio provider. Sirius XM has also been providing conservative guidance in recent quarters, leading to blowout performances that force the media giant to revise its outlook higher.

Sirius XM has been meandering since hitting a four-year high of $3.25 earlier this year, and a strong report on Tuesday could be the perfect catalyst to break through that ceiling. At the very least, the stock should move up on what's likely to be an upbeat quarter. My call here is for Sirius XM to movie higher on the week.

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 tech should be what carries us through the economic recovery. 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. Sturm, Ruger will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

Sturm Ruger (NYSE: RGR  ) is a leading maker of firearms. Let's nip any controversy in the bud. No matter where you stand on the gun control debate, you can probably appreciate why a climate that may grow more restrictive in the future will trigger -- pun intended -- a spike in gun sales. Sturm, Ruger is positioned well to cash in on the run for weaponry.

Another thing it does is make analysts look like perpetual underachievers. If analysts say that the company posted a profit of $1.01 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.

Quarter

EPS Estimate

EPS

Surprise

Q1 2012

$0.68

$0.79

16%

Q2 2012

$0.80

$0.91

14%

Q3 2012

$0.80

$0.88

10%

Q4 2012

$0.82

$1.02

24%

Source: Thomson Reuters.

Things can change, of course. Consumers can shy away from firearms, opting for other protective alternatives. We can get to the point where there's a glut of guns on the market, and someone may resort to buying a used handgun to get more bang -- again, pun intended -- for the buck.

However, none of that seems to be a factor in the near term. 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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