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 Rite Aid (NYSE: RAD  ) would close higher on the week. I thought the turnaround story at the drugstore chain has been validated with every passing quarter, and even though the stock was already at a five-year high, I believed that Thursday's quarterly report would be enough to push the retailer higher. Rite Aid did come through with better-than -xpected results, but it's hard to impress the market when the Dow is getting slammed. After closing higher on Monday, Rite Aid shares proceeded to head lower every single day after that. 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 market closed sharply lower this week. The Nasdaq moved 1.9% lower, but the Dow managed to close just 1.8% lower. I was wrong.
  • My final call was for Kroger (NYSE: KR  ) to beat Wall Street's income estimates in its latest quarter. The supermarket operator has been posting blowout quarterly results over the past year, and I was banking on seeing the trend continue. Analysts were looking for a profit of $0.88 a share during the quarter, and it came through with net income of $0.92 a share. I was right.

One out of three? Bummer! 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. BlackBerry will close lower on the week
There are plenty of reasons to get excited about BlackBerry (NASDAQ: BBRY  ) as it reports quarterly results on Friday. The smartphone pioneer is expected to post a small quarterly profit, which would reverse a sharp loss a year earlier. We'll also get our first official snapshot of how the devices running BlackBerry's updated operating system are doing. It helps that BlackBerry just rolled out cheaper smartphones to help grow outside its high-end corporate niche.

However, the stock has already more than doubled since bottoming out last summer. This naturally leads to higher expectations while its rivals are only getting hungrier. I haven't seen too many new BlackBerry devices in the wild lately. Have you?

My first call is for BlackBerry shares to move lower 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.General Mills will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

General Mills (NYSE: GIS  ) is a titan among food brands. The cereal thriller is best known for Cheerios, Lucky Charms, Wheaties, and other breakfast cereals, but General Mills is also the company behind Green Giant veggies, Yoplait yogurt, and Pillsbury bake-ready treats.

Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $0.53 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 2012

$0.59

$0.60

2%

Q1 2013

$0.62

$0.66

7%

Q2 2013

$0.79

$0.86

9%

Q3 2013

$0.57

$0.64

12%

Source: Thomson Reuters.

Things can change, of course. There's top-line consistency when it comes to foodstuffs, but margins can be all over the map. Grocers operate on razor-thin margins, and wild fluctuations in prices or the inability to pass increases on to end users can sting the bottom line.

However, it's hard to argue against the trend. 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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Read/Post Comments (12) | 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 June 23, 2013, at 3:47 PM, BackStabbed wrote:

    If KR was so good, and indeed it looked great when it beat the estimates, why did the stock drop over $2.00? It does no good to be right when the stock becomes a loser.

  • Report this Comment On June 23, 2013, at 4:35 PM, criticalfool wrote:

    If BBRY closes up for the week, will you stop writing this trash

  • Report this Comment On June 23, 2013, at 4:36 PM, vinestain wrote:

    historically, BBRY has run up ahead of earnings and large events and sold off after. none of us know which way were going this coming week but its already trading well below book value AND there are a LOT of credible bullish reports for the 6/28 earnings so I am expecting the opposite - a runup before earnings and who knows what afterwards! scary time to be a BBRY long.

    I am long BBRY!

  • Report this Comment On June 23, 2013, at 4:38 PM, vinestain wrote:

    the other thing i should point out is that the Fool has posted almost DAILY bearish reports on blackberry with none having a single researched data point behind it. clearly they are very aligned with the Bears interests.

    If you want a credible, thorough, documented analyst research on how BBrY is really doing May Q, look at Misek with Jeffries. They disclose the data behind their position supported by deep supply chain checks and 100's of retail checks in all regions. Their methodology has been 80% accurate the past decade. Make up your own mind!

  • Report this Comment On June 23, 2013, at 6:35 PM, PEStudent wrote:

    I own General Mills: there was 10% less winter wheat harvested in 2013 than in 2012 and that -and similar results across grains- may affect the material costs for GIS.

    I agree this is a great stock, long term. But it may hang back a little if there are soft earnings.

  • Report this Comment On June 23, 2013, at 6:58 PM, Oril wrote:

    Hasn't seen too many Blackberry's in the wild.

    Too funny.

    I guess he doesn't get out much.

    I predict that Rick will die a lonely broke old man while still writing trash for the fool.

  • Report this Comment On June 23, 2013, at 7:25 PM, HelpIsHere wrote:

    Never listen to a Fool, I have learned this much from this site.

  • Report this Comment On June 23, 2013, at 8:06 PM, Mjpbfool wrote:

    Whenever I read the articles on this site or watch the guy who looks like Napoleon Dynamite talk about the mobile sector, I am so thankful that SeekingAlpha exists. A place that actually applies rigor as opposed to the crud MF churns out.

  • Report this Comment On June 23, 2013, at 10:45 PM, Rockthebest wrote:

    120 of my co-workers have q10.

    How is that not wild? Do they only use them at work Rick?

    Get out of town.

  • Report this Comment On June 24, 2013, at 10:07 AM, Mwn560 wrote:

    What concerns me about General Mills is, it seems that there is a major concern that eating GMO's cause autisum, cancer, and leaky gut. People have been facebooking anything regarding GMO's at a very high rate lately. I used to see one post every few months, Now maybe 6-10 a week. I'm not so sure people will keep buying General Mills unless they can do it GMO free, or label it correctly.

  • Report this Comment On June 24, 2013, at 10:19 AM, Oril wrote:

    Blackberry stock has more than doubled since last summer thanks to new products and a return to profitability. Meanwhile Apple stock which the fools have been pumping relentlessly has now lost 300 dollars a share since last summer and show no signs of bottoming out anytime soon.

    This is certainly a well named site.

  • Report this Comment On June 26, 2013, at 6:39 PM, Quarterbeck wrote:

    My trot around cell phone dealers in Vancouver BC shows that the hottest two phones are the Q10 and the Samsung S4. Followed by iPhone. Microsoft's

    phones are doing nothing.

    I have a small position on Blackberry.

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9/30/2014 1:53 PM
^DJI $17026.84 Down -44.38 -0.26%
DOW JONES INDUSTRI… CAPS Rating: No stars
BBRY $9.97 Down -0.26 -2.54%
BlackBerry CAPS Rating: *
GIS $50.35 Down -0.28 -0.55%
General Mills, Inc… CAPS Rating: ****
KR $51.84 Down -0.13 -0.25%
The Kroger Co. CAPS Rating: ***
RAD $4.86 Down -0.09 -1.82%
Rite Aid Corp CAPS Rating: **

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