3 Predictions for the New Week

I went out on a limb last week, and now it's time to see how that decision played out.

  • I predicted that Tesla Motors (NASDAQ: TSLA  ) would close lower on the week. The electric-car maker has been one of this year's hottest stocks, but I thought it was due for a breather at one of its charging stations. The stock did rally on Monday but then headed lower before rallying on Friday. It closed out the week 1.3% lower. 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, this was a mixed week for stocks. The Nasdaq moved 0.4% lower, losing out to the Dow and its 1.1% gain. I was wrong.
  • My final call was for Costco (NASDAQ: COST  ) to beat Wall Street's income estimates in its latest quarter. The warehouse-club operator has been an all-weather champ through thick and thin, and it has also been consistently beating bottom-line expectations. I was banking on a repeat performance, but Costco didn't come through. I was wrong.

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. Advanced Micro Devices will close higher on the week
Advanced Micro Devices (NYSE: AMD  ) is moving beyond its microprocessor stronghold. AMD chips will power all three of the major gaming consoles when the Xbox One and PS4 hit the market next month.

AMD is also reporting earnings on Thursday, and it should be a good one. It has been posting narrower deficits than Wall Street has been expecting over the past three quarters, and this time these same analysts see AMD returning to profitability. That would be a big event for AMD -- and its shareholders.

My first call is for this AMD to move 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, much to the disdain of regular readers who would love to see something different in this slot. It's earnings season, and this is the time for the Nasdaq's growth stocks to shine. 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. SanDisk will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

SanDisk (NASDAQ: SNDK  ) is the leading player in flash memory. From digital cameras to a growing number of smartphones and tablets, a lot of the new tech toys are hungry for reusable flash memory cards. SanDisk's leading the way with the cost advantages and distribution prowess that improve a market leader's chances.

Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $1.31 a share in its latest quarter, I'll argue that it held up better than that. 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

Q3 2012

$0.33

$0.48

46%

Q4 2012

$0.76

$1.05

38%

Q1 2013

$0.79

$0.84

6%

Q2 2013

$0.93

$1.21

30%

Source: Thomson Reuters.

Things can change, of course. SanDisk has run into challenging cycles in which cutthroat competition smack margins. The trend that has favored Android devices with flash memory card slots can also move back to more of the closed platforms that dominated the market before.

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.

3 more long-term predictions can be found in this special free report
Well, there are three predictions right there. Let's see how I fare this week. Meanwhile, remember that the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "
3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.


Read/Post Comments (0) | Recommend This Article (2)

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2680299, ~/Articles/ArticleHandler.aspx, 8/21/2014 6:53:07 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement