These Stocks Laugh at Wall Street

In these heady economic times, Mr. Market seems to enjoy dogpiling on any stock that dares to fall short of analysts' estimates. To defy that trend, we're here to celebrate stocks that didn't merely meet Wall Street's predictions, but laughed in analysts' faces by leaving their miserly forecasts in the dust. The companies below have all soundly trounced earnings estimates by 20% or more in the last quarter.

Sometimes a company will be forecast to lose money, but they'll upend the analysts' apple cart by recording profits. You sometimes can't actually calculate by how much they beat the estimates (7th-grade math tells us we can't divide by zero or less and get a meaningful result), but it's still useful to understand why they were able to exceed expectations.

Source: Zacks.com.

The above three companies beat estimates recently, but that isn't necessarily enough to make the stock a winner. Analysts are notoriously lousy at forecasting results, and one-time items can sometimes push earnings over the top. Wall Street professionals typically don't include such extraordinary events in their forecasts.

Rather than focusing only on the past, we'll check whether analysts have a bead on future performance. With help from Motley Fool CAPS, we'll see which of the companies listed above will have the last laugh.

Laugh, clown, laugh!
The problem with Crocs hasn't necessarily been with its shoes, which its devotees will attest are extremely comfortable and durable, and many would say fashionable to boot. No, much of Crocs' problems emanated from its management of the company, the high debt, and the inability to get inventory under control. Sometimes, though, the two sides collided with views about fads intersecting with the way the business was being run. It was easy to see why the shoemaker relegated to the bargain bin, if not headed for a worse fate.

Yet last quarter showed that on almost all fronts Crocs has its act together and is no longer endangered. Sales, profits, and a decent balance sheet make the rubber shoe maven much stronger financially. Of course, there are newer trends out there that could impinge growth. Skechers' (NYSE: SKX) "shape-up" shoes have been enjoying double-digit growth lately, and with them showing up in the same outlets like Famous Footwear and DSW (NYSE: DSW), greater competition for limited dollars could keep Crocs' growth in check.

While CAPS member BiggestFool thinks Crocs has "momentum on its side," rknapton sees it as simply a declining brand that has little upside potential.

The shoes were a fad, and if you don't think that qualitatively, just look at the numbers for yourself. Revenues have declined from $847 million in 2007, down to $722 million in 2008, and then down to $646 million in 2009. Don't blame anything on a recession. This is simply the result of 9 year olds not begging their parents for a pair of Crocs anymore, because they just are not "cool" anymore.

Light at the end of the tunnel
The future's bright, says General Electric, but the luminescence will be coming from LEDs, not incandescent light bulbs. GE has been one of those long helping to bring LEDs into the mainstream and a new deal with Rambus (Nasdaq: RMBS) will give the alternative light source a big push as tighter bulb regulations become reality in 2012. It ought to be a lucrative investment for GE. But with the economy limping toward a double-dip recession and the conglomerate having a finger in many pies, CAPS member trurl9 doesn't see GE's stock doing much until the economic situation improves.

LEDs are highly efficient though, and GE is also heavily invested in other alternative energy means, which davfoo says it's all part of a coordinated effort that will pay off in the long run.

GE is poised to take advantage of the huge energy and infrastructure changes that are needed and will be needed in the next decade. Global warming is real. Coal has other more immediate health and environmental consequences which will be cost a lot to mitigate in the future. In the short run, energy efficiency, and wind power, hydro and geothermal will boom. In the longer term we may see Nuclear power reemerging. GE will benefit for all these trends.

Dim the lights
Internet network hardware and software maker Sonus Networks should gain no matter which way VoIP goes as it provides solutions for both wireline and wireless service providers. As more information gets routed over the Internet, it'll need robust gatekeepers to regulate the flow of traffic from outside networks. Sonus is expanding its softswitch technology to allow for its carrier customers like AT&T and Verizon (NYSE: VZ) to choose the functionality they desire. Sonus claims the switch is the most dense and scalable SBC in its class.

To techies that, no doubt, is some meaningful information; to investors, though, they can discern that it ought to allow Sonus to build on its previous quarter's improvement where revenue rose 52% and it was able to break even on a per share basis. CAPS members are solidly behind the communication equipment special, with 94% of this rating it indicating they think it will outperform the broad market averages.

Go to the Sonus Networks CAPS page and voice your opinion on its future.

Yucking it up
The market's rally has changed from being mostly fueled by low-quality stocks to dragging most others along based on lower year over year comparables. If you think there's some funny business afoot, let us know -- head over to Motley Fool CAPS and sound off.