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 Sirius XM Radio (NASDAQ: SIRI  ) would move higher on the week. The satellite-radio provider had closed lower in three consecutive weeks, and you have to go back to June to find the last time that had happened. The shares bounced back nicely the following week. It seemed to be a repeat performance this time around, with the stock up nicely through Thursday. It gave back all of those gains on Friday to close unchanged for 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 great week for stocks. The Nasdaq moved 1.3% higher, but that wasn't enough to catch the Dow and its 1.6% pop. I was wrong.
  • My final call was for CalAmp (NASDAQ: CAMP  ) to beat Wall Street's income estimates in its latest quarter. The fast-growing provider of wireless communication solutions has been routinely beating Wall Street projections over the past year. I was banking on a repeat performance. CalAmp came through by posting a profit of $0.23 a share, blowing past the $0.21 the pros were forecasting. CalAmp's soft guidance for the current quarter hurt the stock, but a beat's a beat. I was right.

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. Sirius XM will move higher on the week
I got cheated on my Sirius XM call with a buzzer-beater on Friday, so I'm going back for redemption. When's the last time that the satellite-radio monopoly posted four weeks in a row without moving higher? What are the chances of that stretching to five?

With Sirius XM's monthly rate inching higher in January, this should push profitability sharply higher, given the nature of this model, where the fixed costs are high and the variable costs are low. Investors may have ignored Sirius XM in December, but that should change soon.

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'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. Lindsay will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

Lindsay (NYSE: LNN  ) is a provider of irrigation systems and infrastructure products. Its irrigation solutions help farmers stabilize crop production while conserving water, energy, and labor. Its infrastructure products enhance road safety.

Another thing it does is make analysts look like perpetual underachievers. If analysts say that the company posted a profit of $0.89 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

Q1 2013

$0.75

$1.15

53%

Q2 2013

$1.30

$1.50

15%

Q3 2013

$1.80

$2.01

12%

Q4 2013

$0.91

$0.81

(11%)

Source: Thomson Reuters.

Things can change, of course. Lindsay did miss -- and miss badly -- last time out. I usually like to pick stocks that have four quarters in a row of market-thumping performances, but there were only a few companies reporting earnings during this holiday-abridged trading week. I'll take my chances and hope that the fiscal fourth-quarter miss was a fluke and not the beginning of a trend. 

Three for the road
Well, there are three predictions right there. Let's see how I fare this week. Meanwhile, if you want a prediction that will play out over the course of the year ahead, 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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  • Report this Comment On December 29, 2013, at 3:32 PM, sirifair6 wrote:

    Rick,

    I will be first to congratulate you if siri goes up next week as you predict. I have my reservations.

    I saw no actual reason for siri to go down after Q3 announcement. Their misses were miniscule and rough 2014 revenue guidance was above $4B that threw off a lot of folks. No one cared to pay attention to $1.38B EBIDTA guidance for 2014 that means that fcf should approcah $1.1B. Healthy, isn't it?

    No one is willing to notice that "above" could be $200M or $300M "above". If siri scores its advertised revenue at $3.77B in 2013 there has to be an absolute disaster for them not to repeat their 2013 revenue growth by about $370M at a minimum. Why at a minimum? Because there will be a .5% MRF increase that counts as revenue and a 50 cent price increase in 2014. As to their sub growth, again there has to be a disaster not to grow by 1.5M self pay subs like in 2013. OEMs will reach 16.4M and used car penetration will be more and more effective. Piolin alone might garner over 500K new Hispanic subs.

    As to the stock price, a lot will depend on liberty and what they want short-term that we actually have no idea of. If they are willing to sacrifice another year of a low siri share price for the sake of cheaper buybacks, they will try to supress the share price as much as they can by dumb announcements like "above" $4B or something of this nature. Let us not forget that low siri share price may adversely afftect lmca share price since siri is sort of a tracker for liberty today and liberty shareholders might end up unhappy.

    Otherwise I see no reason to worry about siri's health and future. Malone will make his billions off the company and true longs will benefit no doubt.

  • Report this Comment On January 08, 2014, at 2:50 PM, prayingmonk wrote:

    Rick

    Why is it that no one is picking up on CalAmp Corp.? How does it compare to say a wireless company like SWIR. Are they chasing the same technology ? Would love to hear your thoughts....

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