3 Predictions for This Week
Jun 17th 2012 3:07PM
Updated Jun 17th 2012 3:08PM
I went out on a limb last week, and now it's time to see how my calls played out.
- I predicted that Apple (NAS: AAPL) would close higher on the week. The Worldwide Developers Conference, the tech giant's annual gathering to get developers up to speed on its latest products and software updates, ran all week, and I expected news from the conference to boost shares. It wasn't to be. The stocks meandered all week and ended up shedding 1.1%. I was wrong.
- 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. The market rallied last week, and the Dow clocked in with an impressive 1.7% gain, while the tech-heavy Nasdaq managed to inch only 0.5% higher. I was wrong.
- My final call was for Kroger (NYS: KR) to beat what Wall Street analysts were forecasting on the bottom line in its latest quarter. The grocery-store chain held up nicely at the checkout line, just as it had over the past few quarters. Kroger's profit of $0.78 a share was just ahead of the $0.72 Wall Street was forecasting. I was right.
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. Barnes & Noble will report a larger deficit than expected
Barnes & Noble (NYS: BKS) reports on Tuesday. Wall Street sees a loss of $0.93 a share, and that's an improvement to the $1.04 loss it posted a year earlier.
I'm not convinced that the company is any closer to figuring out how to turn a profit on its money-sucking Nook business or its emptying stores. The need to perpetually improve the Nook -- now in its latest glowing incarnation -- at cutthroat prices makes it highly unlikely that the bookseller is making life easier on its accountants.
I see Barnes & Noble losing more money this quarter than the $0.93 a share analysts are targeting.
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 mega-caps that make up the Dow Jones Industrial Average.
3. Bed Bath & Beyond will beat Wall Street's earnings estimates
Some stocks are just flat out better than others.
Bed Bath & Beyond (NAS: BBBY) is a leader when it comes to home good retail. Whether it's a matter of finding a new shower curtain, grabbing refills for your single-serve espresso maker, or buying new oven mitts after last week's scorched lasagna disaster, Bed Bath & Beyond is there. Unlike other superstore concepts that have buckled to the pressure of online retail or bigger-ticket home-improvement items, soft goods for the home are an all-weather specialty.
Another thing this company does is make analysts look like perpetual underachievers. If analysts say that the company earned $0.84 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. Online retailers can expand their reach to the point where hand towels and goose down comforters make more sense through Web-based discounters. Discount department-store chains that excel on turnover to drive prices lower can get bigger in this niche.
However, there are no signs that the company 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 Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple and Bed Bath & Beyond, writing puts on Barnes & Noble, 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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