3 Predictions for the New Week

There are always calls to be made, because the market never sleeps.

Mar 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 RadioShack (NYSE:RSHCQ) would post a wider loss than expected. The struggling small-box retailer of wireless products and other consumer electronics was having a hard time keeping its red ink in check in recent quarters, and larger chains had already provided uninspiring snapshots of the niche. Well, the report was brutal. RadioShack's adjusted loss of $1.29 a share was far worse than the $0.13 analysts were forecasting. I was right.
  • The Dow Jones Industrial Average (DJINDICES:^DJI) has been strong lately, but my second prediction still called for the tech-heavy Nasdaq Composite to outpace the Dow. It was close, but the Dow's 0.8% advance squeaked past Nasdaq's 0.7% gain. I was wrong.
  • My final call was for Ambarella (NASDAQ:AMBA) to beat Wall Street's income estimates in its latest quarter. The provider of system-on-chip solutions for the HD camera industry has been riding high with its handiwork found in GoPro sports enthusiasts' cameras and Dropcam home security products. Ambarella closed out the quarter with an adjusted profit of $0.26 a share. Analysts had been banking on net income of $0.19. I was right.

Two out of three? I can live with that! I have now gone a solid 20 out of 24 over the past eight weeks.

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. Novavax will post a wider loss than expected
Novavax (NASDAQ:NVAX) is a widely traded maker of vaccines. It moved higher late last month after extending its contract with the U.S. Department of Health and Human Sciences to develop seasonal and pandemic influenza vaccines.

Unfortunately, Novavax is losing money, and analysts seem to underestimate the red ink. Wall Street has failed to nail its projections when it comes to Novavax, aiming for a much smaller deficit than what the vaccine maker ultimately reports.

Why get in the way of a long-running streak? My first call is for Novavax to post a wider quarterly loss than Wall Street's projecting this week.

2. The Nasdaq will beat the Dow this week
I've routinely picked the tech-heavy Nasdaq Composite to beat the Dow Jones Industrial Average, but I've been switching things out in recent weeks. I'm going back to my original call this time around, betting on a strong week for tech now that earnings season is starting to wind down. This approach didn't pan out for me this past week, but that won't deter me.

My second call is for the Nasdaq Composite to outperform the Dow Jones Industrial Average on the week.

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

magicJack VocalTec (NASDAQ:CALL) is a provider of Web-based phone services. Consumers looking to save money have been ditching traditional landlines, and the VoIP pioneer has sold 10 million of its magicJack devices.

Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $0.19 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. Analysts are starting to catch up as the strength of the bottom-line beats have weakened in each of the past two quarters. This is a competitive market, and it bears pointing out that analysts see magicJack VocalTec earning less than half as much as it did a year earlier.

It's still 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 I leave you with three more recommendations. It's no secret that investors tend to be impatient with the market, but 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 Ambarella. The Motley Fool recommends and owns shares of Ambarella. 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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