I went out on a limb last week, and now it’s time to see how that played out.
- I predicted that Sturm, Ruger & Company (NYSE:RGR) would move higher on the week. The firearm maker was reporting on Wednesday, and demand for weaponry amidst the gun-control debate has been explosive. How’d things go? Shares of Sturm, Ruger climbed nearly 5% higher 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? It was a tense week for the major exchanges, though they ultimately squeezed out modest gains. The Nasdaq closed 0.3% higher. The Dow, on the other hand, managed to clock in with a gain of 0.6% on the week. I was wrong.
- My final call was for Priceline.com Inc (NASDAQ:PCLN) to beat Wall Street’s quarterly profit target. The fast-growing online travel portal has been growing quickly, blowing through Wall Street’s bottom-line forecasts with ease over the past year. Analysts were looking for a profit of $6.54 a share during the seasonally sleepy holiday quarter, and the dot-com speedster came through with net income of $6.77. I was right.
Two 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. Ferrellgas Partners will shoot higher on the week
Ferrellgas reports on Thursday. Analysts see a big pop in profitability despite a drop in revenue. The company announced its regular quarterly distribution of $0.50 a unit on Tuesday, so that should soothe investors. It should be a mixed report, but one that will remind investors of the high-yielding opportunity here.
My first call is for Ferrellgas Partners, L.P. (NYSE:FGP) to close the week higher.
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 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. Main Street Capital will beat Wall Street’s earnings estimates
Some stocks are just flat-out better than others.
When it comes to business development companies, Main Street Capital Corporation (NYSE:MAIN) has been a strong performer. Shares soared 44% last year, and that’s before tacking on the company’s healthy stream of monthly dividends. Investors have been hopping on BDCs — which lend money to cash-hungry companies in exchange for healthy interest rates and occasionally some equity — and then return at least 90% of their proceeds to their investors.
Another thing Main Street Capital Corporation (NYSE:MAIN) does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $0.49 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 |
|---|---|---|---|
| Q4 2011 | $0.41 | $0.45 | 10% |
| Q1 2012 | $0.45 | $0.48 | 7% |
| Q2 2012 | $0.44 | $0.47 | 7% |
| Q3 2012 | $0.46 | $0.49 | 7% |
Source: Thomson Reuters.
Things can change, of course. Despite a diversified portfolio, companies do default on their financing from time to time. A peer of Main Street Capital Corporation (NYSE:MAIN) also pointed out a few days ago that the climate for finding new opportunities to put money at work with strong risk-adjusted returns is challenging. Central bank policies have gotten aggressive, and that’s encouraging riskier behavior in the credit markets at a time when investors are starving for high yields.
However, the climate still appears to be a good one for Main Street Capital. Everything seems to be falling into place for another market-thumping quarter on the bottom line.
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 priceline.com and owns shares of priceline.com and Sturm, Ruger.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
