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 Darden Restaurants (NYSE: DRI  ) would move lower on the week. The casual-dining giant behind Olive Garden and Red Lobster has been struggling at its flagship concepts lately. It didn't seem as if this one would go my way. The week kicked off with an activist investor urging Darden to make cost-cutting moves that it felt could push the stock as high as $80. Then came Thursday morning's earnings report. It was a dud, and Red Lobster's struggles left Darden looking to unload the seafood chain. Even with stocks in general staging a healthy rally, shares of Darden slipped 1% on the week. 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 great week for stocks. The Nasdaq moved 2.6% higher, but that wasn't enough to catch the Dow and its 3% pop. I was wrong.
  • My final call was for Lennar (NYSE: LEN  ) to beat Wall Street's income estimates in its latest quarter. The popular homebuilder has been routinely beating Wall Street projections over the past year. I was banking on a repeat performance. Lennar came through, fueled by a robust housing market where buyers are willing to pay more for new properties. It posted a profit of $0.73 a share, blowing past the $0.62 the pros were forecasting. I was right.

Two 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. Sirius XM Radio will move higher on the week
Sirius XM Radio  (NASDAQ: SIRI  ) has been running into some resistance lately. The only game in town when it comes to satellite radio has closed lower in three consecutive weeks. The last time this happened was back in June, and the stock bounced back nicely the following week.

Sirius XM should still pick up some steam as we head toward the end of the calendar. The stock's had a good run in 2013, so it's not as if there will be year-end selling for tax purposes. There may have been some rotation out of Sirius XM earlier this month, but the fundamentals continue to be sound.

My first call is for Sirius XM's stock to move higher 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 was a bad bet this past week. If we do have a Santa Claus rally as we may appear to be having, tech stocks should be the ones to lead the exchanges higher. 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. CalAmp will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

CalAmp (NASDAQ: CAMP  ) is a fast-growing provider of wireless communication solutions. It's been on a growth tear lately, and analysts see revenue climbing a healthy 3% this year.

Another thing it does is make analysts look like perpetual underachievers. If analysts say that the company posted a profit of $0.21 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

$0.12

$0.17

42%

Q4 2013

$0.14

$0.16

14%

Q1 2014

$0.13

$0.16

23%

Q2 2014

$0.16

$0.19

19%

Source: Thomson Reuters.

Things can change, of course. Companies can scale back on what they're spending on data, voice, and video networked solutions. There's always the appeal of running off to a rival that's offering cutthroat pricing.

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. In the meantime, remember that there's a huge difference between a good stock, and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.


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