3 Predictions for the New Week

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 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  (DJINDICES: ^DJI  )  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  (NYSE: 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 (NYSE: 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  (NASDAQ: 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.

Quarter

EPS Estimate

EPS

Surprise

Q3 2013

$0.85

$1.05

24%

Q4 2013

$0.25

$0.55

120%

Q1 2014

$0.91

$1.04

14%

Q2 2014

$0.19

$0.28

47%

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.

Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.


Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3003455, ~/Articles/ArticleHandler.aspx, 10/26/2014 12:29:40 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement