Look to Buy Apple, Sell Sirius This Week: Opinion

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- If something can go wrong, it probably will.

This may not be the healthiest way to approach life, but it has often been my investment approach in what I consider broadly irrational bull markets. Warren Buffett said it another way by suggesting that we "be fearful when others are greedy."

There are a lot of truths in those sayings, both of which imply the importance of protecting oneself.

Over the past several weeks I have remained bearish on the market and discussed stocks that investors should sell leading into what we are seeing now: the pullback or the so called "correction" that we often talk about.

Although the declines are not entirely surprising on some equities, on others, such as Apple, they have raised some eyebrows to the point where it is time for me to re-evaluate what I once perceived to be true.

There have been a lot of corporate headlines during this earnings season and this past week in particular.

But unfortunately they have not been enough to inspire investor confidence to fight off the bear claw currently attached to the head of the market.

On Friday it was mostly the same, although stocks climbed modestly, thanks to solid earnings from McDonald's ( MCD), Chipotle Mexican Grill ( CMG) and Microsoft ( MSFT).

What I have begun to realize is that although corporate results look good and an impressive number of companies are beating estimates, investors are unable to make up their minds about what news should matter the most.

One week it is Europe's prolonged fiscal decay. The next week it is the perceived end of QE3. This past week it seemed that investors showed some concern regarding China's industrial activity.

So schizophrenia still dominates the market, and investors are too quick to shrug off solid corporate earnings because of fear about events that don't often matter to the corporate bottom line.

Leading into next week, here are some stocks that will be driving the market in one direction or another.

Apple ( AAPL): Of course, the first stock that I will be monitoring closely next week is Apple, which has served as an anchor for the stock market.

The company will report second-quarter earnings on Tuesday, and for as much as Apple is loved, there are some investors who will be looking for a slip.

But people looking for weak results may be disappointed, as Apple has already reported selling 3 million of its newest iPad during the first three days of the product's introduction.

Apple shares closed at $572.98 Friday, their lowest level since early March. They're down $71.02, or 11%, from their high of $644.

It hasn't helped that Qualcomm ( QCOM), one of Apple's biggest suppliers, recently revealed some supply chain challenges that may impact the company's productivity.

Be that as it may, the stock has seen several new analyst upgrades. Goldman Sachs raised its price target to $750, while Piper Jaffray says the stock is heading to $1,000.

It will be hard for Apple to top the results of its previous quarter, which included the all-important holiday season. But then again, this is Apple, where the only thing that makes sense is to expect the unexpected.

Sirius XM ( SIRI): I will be eager to see how Sirius XM trades in the coming week as investors prepare for it to report first-quarter earnings at the beginning of May.

The stock has had a long track record of running up into earnings, but my suspicions tell me that this time will be different.

After having learned the company's CEO just sold 11 million shares at an average price of $2.20 a share, I wonder whether investors will want to bid up the stock ahead of the earnings report.

One thing is now certain: There will be no preannouncement as many had hoped. But the question still remains whether the company will raise its subscriber guidance.

At its fourth-quarter and full-year 2011 announcement, Sirius said it expected churn to increase slightly, by 0.2%, and that there was a "modest" response from subscribers regarding its recent base price increase.

From that standpoint, I am expecting the subscriber numbers not to be as robust as investors are anticipating, even though Sirius said in February it planned to add 1.3 million subscribers in 2012, a figure widely regarded as low.

I think that if the company can report an increase of 420,000 to 460,000 for the first quarter, that would put it ahead of its expected full-year pace. But I don't think such a number would justify increasing guidance.

I expect shares to drop on the earnings news to less than $2.10 and possibly even to the $2.00 area, unless the company reveals something dynamic regarding its CPO program and or related partnerships with the used-car dealers.

As I have said recently, I would be a seller of the stock ahead of the announcement as the likelihood of any positive news surrounding the used-car partnerships is slim.

Bottom Line

So for next week, I am a buyer of Apple ahead of earnings and a seller of Sirius XM. The companies are obviously going in opposite directions.

And as is often the case in market corrections, the company with a less positive outlook tends to get beaten up more than the one with solid earnings and a giant cash horde.

Also keep a watchful eye on Qualcomm as it is a buy if it falls to less than $60. And be ready to pull the trigger on Microsoft on any signs of weakness as it is heading to $40.

Good luck next week!

At the time of publication, the author was long MSFT and AAPL.

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