Don't settle for ordinary quarterly reports.
If a stock can beat the market's expectations, I believe it has a great chance to beat the market, too. Each week, I spotlight three companies that topped analysts' predictions. Leaving Wall Street's pros with stunned expressions can be a good thing. It usually means that the companies have more in the tank than analysts figured, and capital appreciation typically follows.
Let's take a look at a few companies that humbled the prognosticators over the past few trading days.
We can start with Hasbro
Chipotle Mexican Grill
Analysts never seem to realize that the burrito baron routinely sets the bar low. Chipotle even had the audacity to project flat comps this year -- even though it has routinely posted positive store-level growth during the recession. I knew it was lying. Comps climbed 4.3% during the quarter, and it's now projecting a store-level gain in the mid-single-digits for 2010.
Knowing Chipotle, it may be lowballing again. Just check out how it's zoomed past the pros over the past year alone:
Time Period |
Est. EPS |
EPS |
Difference |
---|---|---|---|
Q2 2009 |
$0.88 |
$1.10 |
25% |
Q3 2009 |
$0.88 |
$1.08 |
23% |
Q4 2009 |
$0.81 |
$0.99 |
22% |
Q1 2010 |
$0.95 |
$1.19 |
25% |
Source: Yahoo! Finance.
It's practically a no-brainer. Eateries with a reputation for high-quality food will be big winners during the recovery. Chipotle and Cheesecake Factory obliterated estimates last week. It's a fair wager that Panera Bread will follow suit this week.
Finally, we have Apple
It's important to keep watching the companies that surpass expectations. Over time, it will 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.