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 Intuitive Surgical (NASDAQ: ISRG  ) would close higher on the week. The company behind the da Vinci surgical robotics system took a hit a week earlier after revealing that sales were soft in its latest quarter. I figured the bad news was already out of the way heading into Thursday's report. Unfortunately, the report was an even bigger disappointment. The stock fell 8% on the week. I was wrong. I predicted that the tech-heavy Nasdaq would outperform the Dow Jones Industrial Average. (DJINDICES: ^DJI  ) . This has been a tricky call lately, so how did it play out this time? Well, this was a close race until tech stocks fell on Friday. The Nasdaq moved 0.3% lower, and the Dow managed to close 0.5% higher. I was wrong. My final call was for CSX (NYSE: CSX  ) to beat Wall Street's income estimates in its latest quarter. The railroad giant 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 $0.47 a share during the quarter, and it came through with net income of $0.52. I was right.

One 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. Apple will close higher on the week
It's time for Apple (NASDAQ: AAPL  ) to shine. The consumer-tech giant has been a disappointing investment since the iPhone 5 came out, and it probably doesn't help matters that many of Apple's tech peers posted uninspiring quarterly results this past week.

However, Apple has been beaten down too far. Everybody knows that margins are being squeezed at this stage in the product cycle of the tech bellwether's main products. There's so much pessimism baked into the numbers that the market should give a positive interpretation to even a ho-hum report on Tuesday.

My first call is for Apple to close higher 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. Yes, last week's earnings reports were rough out of some of the big names in the index, 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. RF Micro Devices will beat Wall Street's earnings estimates
Some stocks are just flat-out better than others.

RF Micro Devices (NASDAQ: RFMD  ) is a chipmaker that's fared well in getting its smartphone chips into devices of the world's two biggest players in this growing space. Another thing it does is make analysts look like perpetual underachievers. If analysts say the company posted a profit of $0.07 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 Estimate

EPS

Surprise

Q1 2013	$0.01	$0.01	0%
Q2 2013	$0.01	$0.03	200%
Q3 2013	$0.08	$0.06	33%
Q4 2013	$0.05	$0.06	20%

Source: Thomson Reuters.

Things can change, of course. We've seen reports of weakening demand for iPhones and Samsung devices. Wall Street also may seem to be a bit aggressive in targeting 42% top-line growth for RF Micro Devices in its latest quarter.

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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