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 TIBCO Software (TIBX.DL) would close lower on the week. The provider of infrastructure software for companies had merely met analyst expectations in back-to-back quarters, and there was little reason to expect that situation to change when it would report on Thursday. I blew it. TIBCO cranked out a strong quarter, and the stock rose 5.3% on the week. I was wrong.
• I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average. (^DJI 0.56%). This has been a tricky call lately, so how did it play out this time? Well, this was a great week for stocks. The Nasdaq moved 1.4% higher, beating the Dow and its 0.5% pop. I was right.
• My final call was for Adobe Systems (ADBE -1.73%) to beat Wall Street's income estimates in its latest quarter. The desktop-publishing software leader had come out ahead on the bottom line in each of the past few quarters, and I was banking on a repeat performance. It didn't happen. Adobe's profit of $0.32 a share was short of the $0.34 analysts were targeting. The stock still soared 9.5% on the week on encouraging subscription numbers for its cloud-based platform, but that wasn't my prediction. I was wrong.

One 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. Microsoft will close lower on the week
This should be a good week for Microsoft (MSFT -1.27%). The software giant is coming off an analyst presentation on Thursday, and it was courting investors by bumping its dividend 22% higher last week and announcing a new $40 billion buyback.

However, I have my doubts that Monday's Surface 2 event will be a game-changer. I also think the analysts who had mixed perspectives after Thursday's presentation may come to realize how hard it will be for Microsoft to transition itself from a software behemoth to the devices and services company it wants to become.

My first call is for this Microsoft to close lower on the week.

2.The Nasdaq Composite will beat the Dow this week
Tech has been a big winner in recent years, so betting on tech over stodgy blue chips has been a good bet for me more often than not.

I'm going to stick with this pick. Most of the names in the composite are just too cheap at this point, and tech should be what carries us through this economic recovery. The market is ripe for the tech-stacked secondary stocks to continue to outpace the 30 megacaps that make up the Dow Jones Industrial Average.

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

Lennar (LEN -1.51%) is a leading homebuilder in the Southeast, and this has been a great time to be a real estate developer. Prices have been rising for the past couple of years, and low interest rates have kept potential homeowners coming to Lennar's new residential communities. Home prices have grown faster than building costs, driving margins and profits higher for Lennar and its peers.

Another thing Lennar does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $0.45 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. Rates are starting to creep up, and that could eventually either curb demand or put an end to the recent appreciation of properties. Lennar has a healthy backlog of orders, but you never know when cancellations will start to spike the way they did a few years ago during the financial crisis.

However, it's 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, and check out these three other predictions for the long haul.