3 Predictions for Next Week

I went out on a limb last week, and now it's time to see how that decision played out.

  • I predicted that Stratasys would close higher on the week. The maker of 3-D printers was a hot stock last year before cooling off in 2013, but I figured its quarterly report on Monday could get the bullish sentiment rolling again. It was a well-received report, and Stratasys went on to inch higher in four of the five trading days. The stock rose nearly 6% on the week. I was right.
  • I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average. . This has been a tricky call lately, so how did it play out this time? Well, the market had a strong run this week, fueled by encouraging corporate developments. Secondary stocks led the way with Nasdaq soaring 1.8% on the week. The Dow managed to close just 1.6% higher. I was right.
  • My final call was for Applied Materials to beat Wall Street's income estimates in its latest quarter. The provider of gear, services, and software to assist in the making of advanced semiconductors, flat-panel displays, and solar photovoltaic products companies has been posting blowout quarterly results over the past year, and I was banking on seeing the trend continue. Analysts were looking for a profit of $0.13 a share during the quarter, and Applied Materials came through with earnings of $0.16 a share. I was right.

Three out of three? Awesome! That makes me 11 of 12 over the past four 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. Best Buy will close lower on the week
Best Buy reports quarterly results on Tuesday afternoon. The stock's been on a tear, up 127% this year alone. There have been some surprising names rallying in 2013, but this is one of the rare ones whose business is actually getting worse. Analysts see a decline in revenue and an outright freefall in profitability when the consumer-electronics superstore chain reports.

There's no more buyout buzz. Its founder agreed to a truce earlier this year. He had also wanted to buy Best Buy last summer for less than where it's trading at now, even though the company is in worse shape.

This kind of run ahead of a questionable report is a ripe recipe for a letdown. My call here is for shares of Best Buy to move 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 the 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. PetSmart will beat Wall Street's earnings estimates
Some stocks are just flat out better than others.

PetSmart is a leading retailer of pets and pet supplies. It also provides some basic veterinary and boarding services. Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $0.96 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.

 Quarter

EPS Estimate

EPS

Surprise

Q1 2012

$0.73

$0.85

16%

Q2 2012

$0.66

$0.71

8%

Q3 2012

$0.63

$0.75

19%

Q4 2012

$1.21

$1.24

3%

Source: Thomson Reuters.

Things can change, of course. We already saw the country's largest retailer post a surprising dip in same-store sales for its latest quarter last week. What if folks are holding back on their pets? A tight economy may also mean skimping on pet care and treats, if not scaling back on actual pet purchases.

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.

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The article 3 Predictions for Next Week originally appeared on Fool.com.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends PetSmart and Stratasys and owns shares of Stratasys. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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