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I went out on a limb last week, and now it's time to see how that prediction played out.
Three out of three? Awesome! Don't look now, but I'm a perfect nine for nine over the past three 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. Zynga will close lower on the week
Zynga (ZNGA +0.00%) was supposed to post quarterly results on Thursday of this upcoming week, but it moved the report a week early so it could announce layoffs and an acquisition. The market liked the early announcement, sending the shares 26% higher on the week.
Zynga is still suffering from sharp declines in revenue and bookings. We've seen how acquisitions in the past of hot mobile properties eventually seem like bad bets when fickle gamers move on. Zynga's flush with cash, so it's not going away anytime soon, but the layoffs sound more like another round of surrendering than setting the stage for a turnaround.
My first call is for Zynga to close lower this week.
2. The Dow will bounce back this week
The market in general has been weak lately, but the Dow Jones Industrial Average itself has been getting pounded. After back-to-back weekly dives -- shedding 3.5% and another 1.1% over the past two weeks -- the 30 blue chips making up the index appear to be collectively correcting.
Enough! I have historically picked the Nasdaq to outperform the Dow in this slot, but this week I'm going even further out on my limb to predict that the Dow will close in positive territory on the week.
3. Green Mountain Coffee Roasters will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.
Green Mountain Coffee Roasters (GMCR +0.00%) is the company behind the Keurig brewing system that delivers one-cup servings of premium java and other beverages through its K-Cup portion packs. It has become the standard platform in single-serve coffee.
Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $0.90 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 |
---|---|---|---|
Q1 2013 |
$0.65 |
$0.76 |
17% |
Q2 2013 |
$0.74 |
$0.93 |
26% |
Q3 2013 |
$0.77 |
$0.82 |
7% |
Q4 2013 |
$0.75 |
$0.89 |
19% |
Things can change, of course. Green Mountain's patent protection on the K-Cup refills ran out in late 2012, and now it's competing against private labels that can legally offer unlicensed K-Cup portion packs. Revenue growth is projected to be the weakest in years as competition heats up. However, you also have lower coffee costs helping Green Mountain boost its profitability.
It's hard to argue against the trend. Everything seems to be falling into place for another market-thumping quarter on the bottom line.