3 Predictions for the New Week

This Fool sees a limb to go out on. And another. And another.

Mar 30, 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 Sirius XM Radio (NASDAQ:SIRI) would move higher on the week. The satellite radio monopoly was at its lowest close in nearly nine months despite improving fundamentals in that time. The market was cruel, though. Before a slight uptick on Friday the shares had fallen in each of the six prior trading sessions. I was wrong.
  • The Dow Jones Industrial Average (DJINDICES:^DJI) was a beast the week earlier, but this time around I pegged the Nasdaq Composite to hold up better. It didn't start out that way with tech stocks getting slammed on Monday, and it didn't end up that way. Nasdaq fell sharply on the week, contrasting a slight uptick in the Dow. I was wrong.
  • My final call was for lululemon athletica (NASDAQ:LULU) to beat Wall Street's income estimates in its latest quarter. The retailer of trendy yoga apparel has been slipping lately, but the chain has beaten analyst targets consistently over the past four quarters. I was banking on a repeat performance. We saw Tilly's close out the quarter with a profit of $0.75. Analysts had been projecting net income of only $0.72. 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. Micron Technology will move higher on the week
Micron Technology (NASDAQ:MU) is on a roll. The memory chip giant has seen its shares more than triple since bottoming out early last year, and its most recent quarter was a blowout. Wall Street was settling for a profit of $0.43 a share, but Micron came through with net income of $0.77 a share.

Despite the recent gains and the tenuous market, Micron's rolling into its next quarterly report on Thursday with plenty of favorable momentum.

My first call is for Micron Technology to move higher this week.

2. Nasdaq will beat the Dow this week
I routinely picked the tech-heavy Nasdaq Composite to beat the Dow Jones Industrial Average, and it's usually been a smart wager.

It was a bad bet last week -- a really bad bet -- but I'm going to stick to it again this week. My second call is for the Nasdaq Composite to beat the Dow Jones Industrial Average for the week.

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

RPM International (NYSE:RPM) is a provider of specialty chemical products for industrial and consumer markets. Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $0.09 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

$0.06

$0.07

17%

Q4 2013

$0.67

$0.72

8%

Q1 2014

$0.71

$0.77

9%

Q2 2014

$0.45

$0.48

7%

Source: Thomson Reuters.

Things can change, of course. RPM's been faring well in the housing boom as consumer demand for its specialty coatings, sealants, and building materials grows, but we've also seen signs that the housing industry is due for a breather. RPM's industrial products include roofing systems, flooring coatings, and other specialty chemicals. They're doing fine now, but it won't be that way if there's an economic downturn.

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 you check out three more investing ideas. As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends lululemon athletica and owns shares of Sirius XM Radio. 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.

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