3 Predictions for the New Week

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 (SIRI 0.98%) would move higher on the week. The satellite-radio provider had a huge spike in short interest during the latter half of May, and that made a short squeeze that much more likely. That's a hard event to time in any given week, but I liked Sirius XM's valuation here. The stock moved 1.5% higher on the week. I was right.
• The Dow Jones Industrial Average (^DJI 0.56%) had been clobbering the Nasdaq Composite through April and early May, but it's been the other way around in recent weeks. My second prediction was for the Nasdaq to beat the Dow on the week. It happened. The Nasdaq Composite rose 1.3% on the week with the Dow gaining by just 1%. I was right.
• My final call was for Red Hat (RHT) to beat Wall Street's income estimates in its latest quarter. The provider of Linux-based software solutions had beaten analyst targets consistently over the past four quarters, and I was banking on a repeat performance. We saw it close out the quarter with a profit of $0.34 a share. Analysts had been projecting net income of $0.33 a share. I was right.

Three out of three? Awesome. I have now gone 14 for 15 over the past five 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. Barnes & Noble will move lower on the week
This doesn't seem to be a good time to be selling paperbacks and hardcovers, but Barnes & Noble (BKS) investors seem to be holding up just fine. The stock is trading closer to its 52-week high than its low, but the fundamentals don't match the sticker price.

Barnes & Noble will report fiscal fourth-quarter results on Wednesday, and it's going to be another sorry chapter. Analysts see another quarter -- and fiscal year -- of red ink and declining sales. Folks aren't buying books the way they used to, but Barnes & Noble's fate is also complicated by its money-slurping Nook operations that are in a state of decline. 

The stock can always move higher on the report if there's a glimmer of hope in terms of an asset sale or if the promising slate of summer book releases pans out. However, given where the stock is, it seems as if any potential good news has been discounted. My first call is for shares of Barnes & Noble to close lower for the week.

2. Nasdaq will beat the Dow this week
I've routinely picked the tech-heavy Nasdaq Composite to beat the Dow Jones Industrial Average, and it was a bad bet through most of March and April, but the Nasdaq has been rolling in recent weeks. I'm going to stick with it again for a repeat performance. My second call is for the Nasdaq Composite to beat the Dow Jones Industrial Average for the week.

3. Apollo Education Group will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others. Apollo Education Group (APOL) is a leading for-profit post-secondary educator. Apollo is the company behind the Web-based University of Phoenix and several other institutions.

Another thing it does is make analysts look like perpetual underachievers. If analysts say the company rang up a profit of $0.66 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.

Source: Thomson Reuters.

Things can change, of course. One of Apollo's peers announced a few days ago that it may have to shut down its operations. Apollo itself has had its marketing tactics questioned in the past, and the industry itself has come under fire lately for the effectiveness of online educators and the lousy repayment rates of student loans. 

That's all stuff to keep in mind down the road, but not now. Everything seems to be falling into place for another market-thumping quarter on the bottom line.