Why settle for ordinary quarterly reports?
Every week I take a look at three companies that beat market expectations, since I believe that it's the biggest factor in a stock beating the market. Leaving Wall Street's pros with quizzical looks on their faces can be a good thing. It usually means that the companies have more in the tank than analysts figured and capital appreciation often follows.
Let's take a look at a few companies that humbled the prognosticators over the past few trading days.
We can start with American Science & Engineering (Nasdaq: ASEI). The maker of security screening equipment saw earnings soar 73% to $0.83 a share. Wall Street was looking for a profit of only $0.70 a share.
With a healthy backlog of orders, the fun appears to be just beginning for the Motley Fool Rule Breakers recommendation. That may explain why the stock hit a fresh 52-week high on Friday, at a time when most of the market is quite weak.
SINA (Nasdaq: SINA) also beat the pros. China's new media giant delivered a 40% spurt in adjusted profitability to $0.44 a share, just ahead of the $0.41 a share that the market was expecting. It follows market-thumping quarterly results put out in recent weeks by dot-com peers Sohu.com (Nasdaq: SOHU) and Baidu.com (Nasdaq: BIDU).
Green Mountain Coffee Roasters (Nasdaq: GMCR) is another topper. Fiscal fourth-quarter net income at the java junkie roughly doubled to $0.28 a share. Mr. Market poured his cup of Joe at the $0.21-a-share mark.
Unlike battered barista-brewing joints like Starbucks (Nasdaq: SBUX) and Caribou Coffee (Nasdaq: CBOU), Green Mountain excels at marketing its premium roasts for home consumption. Back in June, when I recommended that investors throw away their shares of Starbucks, Green Mountain was one of the stocks I suggested to take its place. My suggestion still makes sense, as Green Mountain will continue to do well as folks sidestep the $5 coffees on the way to work and invest in K-cup home-brewing systems instead.
So, keep watching the companies that top expectations. Over time, it will be a rewarding experience for investors as the market rewards the overachievers. That's the kind of surprise we look for in the Rule Breakers newsletter service. Want in? Check out a 30-day trial subscription.
Either way, come back next Monday to learn about more stocks that blew the market away.
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