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 SodaStream  (NASDAQ: SODA  )  would move higher on the week. The company behind the beverage platform that fizzes up flat water had hit a two-year low, and it seemed as if it was due for a pop, no pun intended. It didn't happen The stock slipped 4%, fueled in part by KeyBanc lowering its profit targets for the company. I was wrong.
  • The Dow Jones Industrial Average  (DJINDICES: ^DJI  )  seemed to be coming under pressure with earnings season getting under way with a lot of companies offering problematic preliminary results. In this iffy climate it seemed as if the best bet was to predict that the Dow would close lower on the week. It didn't. I was wrong.
  • My final call was for SanDisk  (NASDAQ: SNDK  )  to beat Wall Street's income estimates in its latest quarter. The flash memory giant had beaten analyst targets consistently over the past few quarters, and I was banking on a repeat performance. We saw it close out the quarter with a profit of $1.41 a share. Analysts had been projecting net income of $1.39 a share. SanDisk shares slipped on weak guidance, but at least it was a beat on the bottom line. I was right.

One out of three? Ouch! I need to get back on track after three bad weeks of prognostications. 

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. Baidu will hit an all-time high
Shares of Baidu  (NASDAQ: BIDU  ) hit an all-time high of $193.89 on July 2. It has failed to surpass that mark over the past 11 trading days. It has come close, but the new trading week should afford it the perfect opportunity to set a new high-water mark. It reports earnings on Thursday, and it wouldn't be a surprise to see investors push Baidu to new highs either before or after the report.

My first call is for Baidu to hit a new all-time high during the week.

2. The Dow will close lower this week
Calling for the Dow to slide during a seemingly iffy week of earnings was a bad call last week. Even the tragic downing of the Malaysian passenger plane didn't sour the market's spirits for too long. I'm still not sold that the Dow's climb last week in light of warnings from so many companies earlier this month is justified. I'll repeat this prediction. My second call is for the Dow to close lower for the week.

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

Facebook  (NASDAQ: FB  )  is the company behind the leading social-networking website, with 1.28 billion monthly active users. Another thing it does is make analysts look like perpetual underachievers. If analysts say the company rang up a profit of $0.32 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

$0.14

$0.19

36%

Q3 2013

$0.19

$0.25

32%

Q4 2013

$0.27

$0.31

15%

Q1 2014

$0.24

$0.34

42%

Source: Thomson Reuters.

Things can change, of course. User growth has been decelerating at Facebook, and while revenue has been growing a lot faster as Facebook gets better at milking more revenue out of page views, that can always change. 

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.

Trend Tracker: Warren Buffett: This new technology is a "real threat"
At the recent Berkshire Hathaway annual meeting, Warren Buffett admitted that an emerging technology is threatening the Oracle of Omaha's bread and butter. And it's no long a question of if, but when, according to the industry's foremost research firm. Find out how you can cash in on this technology before the crowd catches on, by jumping on to one company that could get you the biggest piece of the action. All the details are laid out in a new free investor alert from The Motley Fool. Click here now to learn more!


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

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: 3035893, ~/Articles/ArticleHandler.aspx, 9/22/2014 4:20:10 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...

Today's Market

updated 2 days ago Sponsored by:
DOW 17,279.74 13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASD 4,579.79 -13.64 -0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/19/2014 4:36 PM
^DJI $17279.74 Up +13.75 +0.08%
DOW JONES INDUSTRI… CAPS Rating: No stars
BIDU $224.93 Down -3.52 -1.54%
Baidu CAPS Rating: ****
FB $77.91 Up +0.91 +1.18%
Facebook CAPS Rating: **
SNDK $101.12 Down -2.10 -2.03%
SanDisk Corp CAPS Rating: ***
SODA $31.98 Down -0.51 -1.57%
SodaStream CAPS Rating: ***

Advertisement