3 Predictions for the New Week

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

Feb 9, 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 Zynga (NASDAQ:ZNGA) would close lower on the week. The social- and casual-gaming giant had soared a week earlier after announcing layoffs and an acquisition, and neither move seemed to warrant applause. As fate would have it, the stock did inch higher throughout the week, closing nearly 3% higher. I was wrong.
  • After more than a year of predicting that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average (DJINDICES:^DJI), I mixed things up. I simply predicted that the Dow would bounce back after plunging 3.5% and 1.1% over the prior two weeks. The Dow popped into positive territory on Friday, closing out the week with a 0.6% gain. I was right.
  • My final call was for Green Mountain Coffee Roasters (NASDAQ:GMCR) to beat Wall Street's income estimates in its latest quarter. The company behind the Keurig single-cup brewer has been routinely beating Wall Street projections over the past year. I was banking on a repeat performance, and Green Mountain came through by posting a profit of $0.96 a share, blowing past the $0.90 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. Model N will post a smaller loss than analysts are expecting
Model N (NYSE:MODN) has had a rough rookie year. The provider of revenue management solutions for biotech and technology companies went public 11 months ago at $15.50, and despite the rallying markets in that time, this stock has shed more than a third of its value.

Uninspiring guidance calling for a lot of red ink, shuffling executives, and sales execution challenges have held Model N back. However, once Model N sets the bar low -- and it does -- it finds a way to clear it. The last two times Wall Street was forecasting a quarterly deficit, Model N came through with a much narrower loss one time and an outright profit the other.

Model N reports on Monday after the market close. My first call is for Model N to hold up more favorably than the $0.12-per-share deficit the pros are projecting.

2. The Dow will bounce back this week
The market in general has been weak lately, and the Dow Jones Industrial Average is trading nearly 5% lower for so far in 2014. Last week's modest bounce did little to eat into January's correction.

I'm going to stick with last week's prediction, arguing that the Dow will post a positive return on the week.

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

LeapFrog (NYSE:LF) is the company behind the popular electronic learning toys that started off as simple teaching tools to improve reading skills but have evolved to include full-blown tablets with their own kid-friendly ecosystems of apps.

Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $0.14 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. LeapFrog had a challenging quarter by most accounts, and that's why analysts see a sharp drop in earnings. Cheaper tablets -- including a few kid-friendly ones -- flooded the market, making it harder for LeapFrog to stand out. However, we can't estimate the time-tested appeal of LeapFrog's brand for parents looking to give their young children a leg up on their eventual classmates.

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, as you check out a few more market calls. Meanwhile, keep in mind that investors tend to be impatient with the market, while 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.

Rick Munarriz owns shares of Green Mountain Coffee Roasters. The Motley Fool recommends Green Mountain Coffee Roasters and LeapFrog Enterprises and owns shares of LeapFrog Enterprises. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers