3 Predictions for the New Week

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

Jun 29, 2014 at 3:00PM

went out on a limb last week, and now it's time to see how that decision played out.

  • I predicted that Barnes & Noble (NYSE:BKS) would move lower on the week. The meandering bookseller was set to report another quarterly loss on sliding sales, yet the stock was trading nicely higher for the year. It was a bad report, but Barnes & Noble's plans to spin off its Nook business electrified the bulls. The stock soared 13% on the news. I was wrong.
  • 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 0.7% on the week with the Dow declined 0.6%. I was right.
  • My final call was for Apollo Education Group (NASDAQ:APOL) to beat Wall Street's income estimates in its latest quarter. The for-profit post-secondary educator behind the University of Phoenix online campus 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 $0.76 a share. Analysts had been projecting net income of $0.66 a share. I was right.

Two out of three? I'll take it. I have now gone 16 for 18 over the past six 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. Greenbrier will miss Wall Street's profit target
It builds railroad freight cars and marine barges to keep things moving, but the one thing that Greenbrier (NYSE:GBX) can't seem to do is move its quarterly profitability to the right side of analyst forecasts. 

Greenbrier has come up short on the bottom line in three of the past four quarters. Analysts see Greenbrier posting a profit of $0.74 a share when it reports on Wednesday. That'a big advance from the $0.50 a share it rang up a year earlier, but Greenbrier has missed more often than not over the past year, coming off back-to-back missed heading into this report. My first call is for Greenbrier to earn less than Wall Street is expecting.

2. The Dow will beat the Nasdaq this week
A big reason for my being right 16 out of 18 times over the past six weeks is that the tech-heavy Nasdaq Composite has beaten the Dow Jones Industrial Average in all six weeks. In a surprising twist given my respect for momentum, I'm going to switch sides this week. 

The Dow has been getting creamed by secondary stocks over the past month and change. Between general summer skittishness and the short trading week, my bet this time is that the 30 blue chip stocks making up the Dow will reign supreme after a long drought. My second call is for the Dow Jones Industrial Average to beat the Nasdaq Composite for the week.

3. Paychex will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others. Paychex (NASDAQ:PAYX) is a leading provider of payroll, human resources, and other related services. Paychex offers small- and medium-sized companies the freedom to outsource mundane operations so that they can focus on the business.

Another thing it does is make analysts look like perpetual underachievers. If analysts say the company rang up a profit of $0.40 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 2013




Q1 2014




Q2 2014




Q3 2014




Source: Thomson Reuters.

Things can change, of course. Corporate America hasn't been at its best lately, and Paychex is always under assault from nimble tech upstarts that are hungry for new business.

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.

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Paychex and owns shares of Barnes & Noble. 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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