3 Stocks That Blew the Market Away

• Email
• Share
• Print

Why settle for ordinary quarterly reports?

Each week, I study three companies that beat market expectations, since I believe that such outperformance is the biggest factor in a stock's success. Leaving Wall Street's pros with puzzled 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 see which companies humbled the prognosticators over the past few trading days.

We can start with Pepsi Bottling Group (NYSE: PBG). The largest bottler of PepsiCo (NYSE: PEP) pop earned $0.78 a share in its latest quarter, flat with last year's showing. This may not seem noteworthy, but Wall Street was targeting a profit of just $0.73 a share.

Should analysts have seen this coming? I think so. The pop star hiked its dividend three months ago, an encouraging sign of internal confidence. Pepsi Bottling Group has also beaten Mr. Market's profit targets in each of the past 11 quarters.

The "blow me away" prize goes to A. Schulman (Nasdaq: SHLM). The specialty plastics maker earned $0.36 a share before charges, despite a 42% plunge in net sales. The kicker here? Wall Street was settling for a profit of $0.09 a share.

Finally, we have Ruby Tuesday (NYSE: RT) bringing something meaty to the table. The casual dining chain earned $0.28 a share for its fiscal fourth quarter. Folks may not be eating out the way they used to, but restaurant stocks still savored a good week. Raymond James upgraded shares of California Pizza Kitchen (Nasdaq: CPKI); Steak n Shake (NYSE: SNS) surprised pessimists by posting a 5% gain in comps; and CL King upgraded Chuck E. Cheese parent CEC Entertainment (NYSE: CEC).

Keep watching the companies that surpass expectations. Over time, it might be a profitable 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.