3 Predictions for the New Week

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

Apr 6, 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 Micron Technology (NASDAQ:MU) would move higher on the week. The memory-chip giant was expected to post strong growth for its latest quarter on Thursday. It did even better than that, exceeding Wall Street's bottom-line expectations. The stock still moved lower on Friday, but it had gained more than enough through the first four days of the week to close 3% higher on the week. I was right.
  • The Dow Jones Industrial Average (DJINDICES:^DJI) has been beating the Nasdaq Composite in recent weeks, but I was expecting the trend to reverse itself. The Nasdaq started off strong, but a sharp Friday sell-off found it closing 0.7% lower for the week. The Dow managed to move 0.5% higher on the week. I was wrong.
  • My final call was for RPM International (NYSE:RPM) to beat Wall Street's income estimates in its latest quarter. The provider of specialty chemical products for industrial and consumer markets has beaten analyst targets consistently over the past four quarters. I was banking on a repeat performance. We saw RPM close out the quarter with a profit of $0.12. Analysts had been projecting net income of only $0.09. 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. Micron Technology will move higher on the week
Sirius XM Radio (NASDAQ:SIRI) has been weak lately. The stock did inch higher this past week, but it's still trading 23% lower than when it peaked six months ago.

It shouldn't be that way. Sirius XM is on track for another year of solid revenue and subscriber growth, with free cash flow growing even faster. Its controlling stakeholder, Liberty Media, recently passed on its plan to acquire all of the satellite radio provider, but that should actually help the stock establish greater upside potential. Premium radio has held up well against streaming music apps and the connected car. The market's been rotating out of tech and growth stocks lately, but Sirius XM is getting too cheap to ignore at this point.

My first call is for Sirius XM 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.

That hasn't been the case lately. It was a bad bet in each of the past three weeks, 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. WD-40 will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

WD-40 (NASDAQ:WDFC) is the company behind the namesake lubricant that has tens of thousands of uses. It also puts out industrial cleaners, automatic toilet bowl cleaners, and other essentials. Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $0.68 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

Q2 2013

$0.56

$0.66

18%

Q3 2013

$0.56

$0.66

18%

Q4 2013

$0.45

$0.53

18%

Q1 2014

$0.73

$0.74

1%

Source: Thomson Reuters.

Things can change, of course. After three consecutive quarters of beating Wall Street income estimates by 18% it barely squeezed through with a beat in its most recent quarter. That's not the kind of trend that investors like to see.

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 owns shares of Liberty Media and 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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