Microsoft Corporation (MSFT), OmniVision Technologies, Inc. (OVTI): Three Predictions for the New Week

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. Yes, earnings reports have been rough in some places this season, but the long-term outlook is still quite favorable.

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. OmniVision will beat Wall Street’s earnings estimates
Some stocks are just flat-out better than others.

OmniVision Technologies, Inc. (NASDAQ:OVTI) is the leading maker of image sensors used in cameras. This seemed to be a fading market when digital cameras and laptops began to diminish in popularity, but the mad scramble by smartphone and tablet makers to make sure their devices take slick pictures put OmniVision Technologies, Inc. (NASDAQ:OVTI)’s sensors in high demand.

Another thing the company does is make analysts look like perpetual underachievers. If analysts say OmniVision Technologies, Inc. (NASDAQ:OVTI) posted a profit of $0.43 a share in its latest quarter, I’ll argue that it held up better than that. 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 Est.	EPS	Surprise
Q1 2013	$0.22	$0.21	(5%)
Q2 2013	$0.31	$0.33	7%
Q3 2013	$0.41	$0.56	37%
Q4 2013	$0.21	$0.31	48%

Source: Thomson Reuters.

Things can change, of course. Wall Street isn’t being conservative anymore, and it sees profitability more than doubling on a healthy 46% spike in revenue this quarter. It’s also possible that another price war can break out, sending margins — and naturally earnings — lower.

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.

The article 3 Predictions for the New Week originally appeared on Fool.com and is written by Rick Munarriz.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Pandora Media (NYSE:P) and owns shares of Microsoft.

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