Guideposts to Higher Returns

Stock analysts are just about as likely to be right with their forecasts as economists, meteorologists, and fortune tellers. Actually, while the weatherman might not be any more precise, at least he has a scientific basis for his predictions. Everyone else is about as accurate as monkeys throwing darts.

These days, though, companies are "more explicit" in their guidance, hoping to minimize share-price volatility. So let's use the information the companies provide to our advantage. With the help of the Motley Fool CAPS investor-intelligence database, we can tap the collective thinking of more than 110,000 professional and novice investors alike on which stocks they think are best. We'll look at those companies that have guided higher and pair that information with stocks that CAPS believes has the best chance to outperform the market.

Here are five companies that have recently guided higher, coupled with what CAPS investors think:

Sources: Briefing.com; Motley Fool CAPS.

These are companies showing signs of growing their business, and they're followed by both analysts and the CAPS community. But this isn't a list of stocks to buy; instead, it's a list of suggestions for further research.

Pump up the volume
Chip and handset volumes were in line with what Qualcomm had been expecting all along, but consumers have been buying a greater percentage of high-end communication devices. Analysts believe this should translate into higher sales prices for chips and phones. As CAPS investor midorosan points out, the outlook from OEM phone manufacturers looks good and could keep Qualcomm's signal strong:

With a lot of the legal baggage getting resolved and the new technology announcements QCOM is set to out perform after a long period in the doldrums. Unique technological edge and the royalty stream from mobile phone [means] the outlook is good.

Rolling over expectations
Another company experiencing strong volume demand is steel producer and recycler Steel Dynamics. The lift in demand comes from stronger-than-expected shipping volumes mixed with higher selling prices for flat-rolled steel products. Moreover, it is also seeing stronger volume and margins in recycling. All that adds up to an increase in guidance.

That's enough for CAPS All-Star DarkToast to see Steel Dynamics being a winner, both in the near term and for those with a longer time horizon:

As the infrastructure of developing countries continues to be built out, steel will experience strong demand. The relatively high price recently may dampen demand a bit, but there is really no alternative to using steel for construction. As Cuchulane wrote in his blog a month or so ago, steel recyclers may be the better play in the long term, but I think that steel producers as a sector will outperform the S&P over the next couple of years and maybe beyond.

Guide on!
We want you to guide us with your opinion on these and other companies. Your input can help lead other investors to stocks with bright prospects for growth. Head on over to Motley Fool CAPS and let your voice lead the way.