2. The Nasdaq Composite will beat the Dow this week
Betting on tech over stodgy blue chips was a steady winning bet for me last year. This has been a losing bet lately, but I still think technology is the best sector to be invested in these days.
I’m going to stick with this pick. Most of the names in the composite are just too cheap at this point, and the results this earnings season aren’t as bad as some worrywarts feared. 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. Michael Kors will beat Wall Street’s earnings estimates
Some stocks are just flat-out better than others.
Michael Kors Holdings Ltd (NYSE:KORS) is the leading retailer of stylish apparel, handbags, and other accessories. It’s easy to be skeptical as we head into the Hong Kong-based company’s fiscal third-quarter report on Tuesday. Michael Kors’ biggest rival saw its shares dive last month after a poorly received quarterly report. However, Michael Kors has been able to post strong growth even as other markets for luxury goods have sputtered lately.
Another thing it does is make analysts look like perpetual underachievers. If analysts say that the company posted a profit of $0.41 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 |
|---|---|---|---|
| Q3 2012 | $0.09 | $0.20 | 122% |
| Q4 2012 | $0.16 | $0.22 | 38% |
| Q1 2013 | $0.20 | $0.34 | 70% |
| Q2 2013 | $0.40 | $0.49 | 23% |
Source: Thomson Reuters.
Things can change, of course. Fashion is fickle, and shoppers can head elsewhere for their designer needs. Customers can also grow more cost-conscious, especially as folks come to grips with smaller paychecks in 2013 in light of the payroll-tax stimulus reversal.
However, there are no signs that we’re turning our back on the company. 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.
The article 3 Predictions for Next Week originally appeared on Fool.com and is written by Rick Aristotle Munarriz.
Longtime Fool contributor Rick Aristotle Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple, LeapFrog Enterprises (NYSE:LF), and OpenTable and owns shares of Apple and LeapFrog Enterprises.
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