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 Five Below (NASDAQ: FIVE  ) would move higher on the week. The deep discounter that offers trendy and fashion-friendly items for $5 or less has been a hit with young shoppers, and it was reporting quarterly results. How did it go? Well, Five Below shares slipped after posting weak sales and uninspiring guidance. In fact, Five Below shares closed lower every single trading day of 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? Well, this was a flat trading week for stocks. The Nasdaq moved 0.1% higher, beating out the Dow and its 0.4% slide. I was right.
  • My final call was for Ambarella (NASDAQ: AMBA  ) to beat Wall Street's income estimates in its latest quarter. The provider of video-processing chips found in high-def cameras has been routinely beating Wall Street projections over the past year. I was banking on a repeat performance. It didn't disappoint, serving up a profit of $0.37 a share, blowing past the $0.29 the pros were forecasting. I was right.

Two out of three? I can do better. 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. Pandora will move lower on the week
Pandora  (NYSE: P  ) has been on fire lately. The leading music streaming service moved slightly higher this past week, fueled by encouraging metrics for November.

However, Pandora's unique listeners are still not up to September's levels, which just happens to be when iTunes Radio rolled out. The new week should prove interesting as Beats Music nears its January launch and -- more importantly -- Spotify has a press conference slated for Wednesday, during which it's widely expected to introduce a free mobile streaming option. 

My first call is for Pandora's stock to move lower this 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, even if it's been a bad bet a few times lately. This is the time for 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. lululemon athletica will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

lululemon athletica (NASDAQ: LULU  ) is a retailer of upscale yoga and workout apparel. The chain has been able to grow quickly given the brand's appeal and its stylish sense of athletic wear fashion. Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $0.41 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 2013

$0.37

$0.39

5%

Q4 2013

$0.74

$0.75

1%

Q1 2014

$0.30

$0.32

7%

Q2 2014

$0.35

$0.39

11%

Source: Thomson Reuters.

Things can change, of course. The retailer has had a rocky year. It had an embarrassing recall of its proprietary yoga pants back in May because they were too sheer, and a few months later its celebrated CEO stepped down.

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.

Here are three more predictions for your consideration
Well, there are three predictions right there. Let's see how I fare this week. In the meantime, our top technology analyst recently infiltrated one of Wall Street's most exclusive gatherings and left with three incredible investment opportunities, straight from the CEOs. These are profit-building strategies Main Street isn't meant to hear about -- so you must act now before someone shuts us up. Click if you want "industry insider" earnings -- now!


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  • Report this Comment On December 09, 2013, at 3:32 AM, bluesky64 wrote:

    Rick,

    There are others stocks you should consider let me help.

    Currently the Xbox and Play Station and the AMD R9 290X are sold out world wide. The 3 hottest items in demand are from the chip maker AMD. This means AMD turn around story is intact and AMD is going much higher. Most analyst have raised there guidance for AMD with a price target of $ 10.75 Dec 2014 and the charts confirm this forecast. Plus there's rumbling of a buy out. What say you?

  • Report this Comment On December 13, 2013, at 1:22 PM, TMFBreakerRick wrote:

    bluesky64, I've been bullish on AMD in the past, and it even was the topic of this weekly column two months ago:

    http://www.fool.com/investing/general/2013/10/13/3-predictio...

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