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 the results this past earnings season weren’t as bad as some worrywarts had 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. Mattress Firm Holding Corp. (NASDAQ:MFRM) will beat Wall Street’s earnings estimates
Some stocks are just flat-out better than others.
When it comes to bedding retailers, Mattress Firm Holding Corp. (NASDAQ:MFRM) is a sleeper pick. It’s been acquiring smaller mattress sellers, taking advantage of its economies of scale to consolidate a fragmented retail niche. As bad as the economy can get, it’s hard to put up with a lumpy mattress. Mattress Firm may have run into some challenges lately, but it continues to grow its empire at a heady pace.
Another thing it does is make analysts look like perpetual underachievers. If analysts say that the company posted a profit of $0.32 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 Estimat | EPS | Surprise |
|---|---|---|---|
| Q4 2011 | $0.19 | $0.63 | 232% |
| Q1 2012 | $0.25 | $0.31 | 24% |
| Q2 2012 | $0.29 | $0.42 | 45% |
| Q3 2012 | $0.46 | $0.47 | 2% |
Source: Thomson Reuters.
Things can change, of course. Furniture stores and even some department-store chains are selling mattresses these days. Consumers can also hold back on buying new beds, especially now after this year’s end of the payroll tax stimulus is giving homeowners less money to spend on things. Analysts also see profitability challenged at this point in Mattress Firm’s growth cycle.
It’s not comforting to see Mattress Firm Holding Corp. (NASDAQ:MFRM) barely beat the pros in its most recent quarter. However, it’s hard to argue against the company until this trend reverses. 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.
Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Baidu.
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