3 Predictions for This Week
Jul 15th 2012 3:07PM
Updated Jul 15th 2012 3:10PM
I went out on a limb last week, and now it's time to see how that decision played out.
- I predicted that Apple (NAS: AAPL) would close out the week with a positive gain. After more than two months of trading below $600, the iEverything company had finally broken through that ceiling during the prior week. Momentum seemed to be in its favor. Unfortunately, a Friday surge that pushed the stock to $604.97 was just short of the prior week's close of $605.88. 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 clawed back during the third quarter. How will the third quarter play out? Well, the market had an uninspiring run, and the Dow clocked in flat on the week, while the tech-heavy Nasdaq fell by 0.8% on the week. I was wrong.
- My final call was for Wolverine World Wide (NYS: WWW) to beat what Wall Street analysts were forecasting on the bottom line in its latest quarter. The shoe maker has been landing ahead of where Wall Street's expectations were perched over the past year. Wolverine World Wide's profit of $0.48 a share surpassed the $0.44 that analysts were 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. Intuitive Surgical will close out the week higher
Robotics in the operating room felt more like Rock 'em Sock 'em Robots this week, after a leader in orthopedic robotics posted disappointing sales of its RIO system. The news was bad enough to send that particular company down 43% in a single day!
Now comes Intuitive Surgical (NAS: ISRG) . The company behind the da Vinci surgical-arm platform reports on Thursday. It's easy to be fearful given what the market experienced this past Tuesday, but Intuitive Surgical is further along on the adoption cycle. Intuitive Surgical has also come through with better-than-expected quarterly earnings consistently over the past year.
My first prediction is that Intuitive Surgical will close out the week with positive gains.
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. This has been a losing bet lately, but I'm going to stick with the pick. 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. Select Comfort will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.
Don't tread on Select Comfort (NAS: SCSS) . The company behind the Sleep Number bed, on which users customize the firmness of their air-chambered mattresses, hasn't been keeping its investors up at night. The stock has been one of the market's biggest winners since bottoming out at a ridiculous price of $0.19 four years ago.
Another thing it does is make analysts look like perpetual underachievers. If analysts say the company earned $0.27 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. Its biggest publicly traded rival saw its stock take a beating last month after it put out weak numbers. However, Select Comfort's product is differentiated enough where it's not fair to call it a sympathy play when fellow makers of premium bedding products take a hit.
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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The article 3 Predictions for This Week originally appeared on Fool.com.The Motley Fool owns shares of Apple and Intuitive Surgical. Motley Fool newsletter services have recommended buying shares of Intuitive Surgical and Apple and creating a bull call spread position in Apple. 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. The Motley Fool has a disclosure policy.
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