3 Predictions for the New Week

This Fool sees a limb to go out on, and he's still the adventurous type.

Jan 19, 2014 at 3:00PM

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

  • I predicted that Kinder Morgan (NYSE:KMI) would miss Wall Street's profit target. Analysts were expecting a profit of $0.35 a share out of the country's largest network of natural gas pipelines, but Kinder Morgan's past few quarters fell woefully short of expectations. It posted net income of $0.33 a share. 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 somewhat upbeat week for stocks. The Nasdaq moved 0.5% higher, and that was more than enough to beat the Dow and its 0.1% climb. I was right.
  • My final call was for Wells Fargo (NYSE:WFC) to beat Wall Street's income estimates in its latest quarter. The banking giant has been routinely beating Wall Street projections over the past year. I was "banking" on a repeat performance, even with mortgage originations waning in this volatile climate for interest rates. It came through by posting a profit of $1.00 a share, blowing past the $0.98 the pros were forecasting. I was right.

Three out of three? Awesome!

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. Netflix will close higher on the week
Netflix (NASDAQ:NFLX) reports quarterly results on Wednesday, and it's easy for investors to get scared. The leading video service posted blowout results three months ago, and the stock still took a beating after the initial pop higher.

The good news is that Netflix was trading much higher before its third-quarter report than it is now. The shares have still appreciated considerably over the past year, but it's trading well below its all-time highs. Another strong report -- and that's what it has usually been with Netflix these days -- should get the stock moving up again.

My first call is for Netflix to gain ground 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. January has historically been a good time for growth stocks, and 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. AMD will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

AMD (NASDAQ:AMD) has gone from being a strong player in microprocessors to commanding a semiconductor presence in various consumer electronics. With November's launch of the Xbox One and PS4, it has chips in all three video-game consoles.

Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $0.06 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.


EPS Estimate



Q4 2012




Q1 2013




Q2 2013




Q3 2013




Source: Thomson Reuters.

Things can change, of course. We've seen several retailers post bleak results when it comes to how consumer electronics were selling this holiday shopping season. AMD has also just recently turned the corner of profitability, and slipping back into the red isn't out of the question.

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. Meanwhile, remember that the best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report, "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.

Longtime Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends and owns shares of Kinder Morgan, Netflix, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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