3 Predictions for This Week
Jun 10th 2012 3:14PM
Updated Jun 10th 2012 3:16PM
I went out on a limb last week, and now it's time to see how things played out.
- I predicted that United Natural Goods (NAS: UNFI) would close higher on Tuesday. The distributor of natural, organic, and specialty foods was reporting quarterly results in the morning, and similar companies had delivered strong results earlier in the earnings season. Well, United Natural Foods did post better-than-expected earnings. The stock rose nearly 2% higher on Tuesday. I was right.
- I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average. (INDEX: ^DJI) . This was a consistent winning call during the first quarter, but the Dow 30 has won most of the early rounds this quarter. Well, the market rallied last week. The Dow put in an impressive 3.6% gain, but the tech-heavy Nasdaq pulled off a better than 4% gain. I was right.
- My final call was for Men's Wearhouse (NYS: MW) to beat what Wall Street analysts were forecasting on the bottom line in its latest quarter. The suit retailer didn't make me look as sharp as it does when it sizes me up for a business suit. Men's Wearhouse's profit of $0.53 a share was just short of the $0.55 Wall Street was forecasting. I was wrong.
Two 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. Apple will close higher on the week
Apple (NAS: AAPL) fans have long had this week circled on their calendars. The tech giant's annual Worldwide Developers Conference runs from Monday through Friday, and Apple is likely to make an important announcement or two along the way.
It's sometimes dangerous to own a stock ahead of an event that everyone is expecting, but Apple's stock continues to trade well below its April peak. In other words, it's not as if the market is discounting important announcements out of Apple. I like the company's chances of impressing the market and moving higher this week.
2.The Nasdaq Composite will beat the Dow this week
Betting on tech over stodgy blue chips was a steady winning bet for me earlier this year. Investors have been nervously rotating out of the tech bellwethers in recent weeks, and that's been making this call a bad bet lately. It seemed so easy when the market was pulling off back-to-back quarters of double-digit percentage gains, but I'm going to stick with this one. Most of the names in the composite are just too cheap at this point.
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. Kroger will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.
Kroger (NYS: KR) is more than just a grocery-store giant. In addition to overseeing 2,435 supermarkets and multi-department stores, it also operates 791 convenience stores and 348 jewelry stores. Another thing it does is make analysts look like perpetual underachievers.
If analysts say that the company earned $0.73 a share in its latest quarter, I'll whip out a "greater than" sign. 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. Grocers work on lean margins, and that requires a lot of inventory turnover to make healthy profits. Discount department stores continue to flesh out their grocery aisles, giving traditional supermarket operators a run for their money.
However, there are no signs that Kroger will fumble this quarter to the point of failing to live up to Wall Street estimates. Everything still seems to be falling into place for another strong quarter on the bottom line.
Three for the road
Well, there are three predictions right there. Let's see how I fare this week.
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At the time this article was published The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He owns no shares in any of the stocks in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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