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 will upend the analysts' apple cart by recording profits. You sometimes can't actually calculate by how much they beat the estimates (seventh-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: Yahoo! Finance and CAPS.
EPS = earnings per share. LT = long-term.

The three companies above beat estimates recently, but that isn't 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!
This ain't Pamplona, but the bulls are running anyway. The S&P 500 is up 6% over the first eight trading days of July and now sits just under 1,100. The Dow is up a similar amount and is firmly back over 10,000. The market is back, baby!

Well, maybe.

Whatever the longer-term trend is, the recent flurry of activity indicates traders are coming back to the market, and that signals good news for discount brokers E*TRADE Financial, TD AMERITRADE (NYSE: AMTD), and Charles Schwab. Reports were that they likely suffered from a dearth of trading activity last month, estimated as being down 30% following May's so-called "flash crash."

With Bank of America (NYSE: BAC) entering the discount fray with its new Merrill Edge brokerage, competitive challenges aren't decreasing. (Remember when Merrill Lynch wouldn't even think of offering online trading for fear of offending its huge herd of brokers?) E*TRADE, which has weakened substantially since the recession began, might have the most to lose. On CAPS, there's a palpable sense the discount broker is a prime takeover target, as exemplified by member TheBlindCat:

I trade with them and agree with other fools that they make an attractive buyout candidate. The stock looks beaten down a bit more than it likely deserves, so be bold while others are fearful.

Light at the end of the tunnel
The ratio between gold and silver prices has remained out of whack for an appreciable length of time. Historically at 20-to-1, there's been a sustained disconnect with gold trading around 60 to 70 times the value of silver for a year or so now. Since the financial crises in Europe still fester, gold is once again viewed as a safe haven, renewing hopes for a "slingshot effect" for silver.

That bodes well for Hecla Mining, which remains depressed, its stock well off recent highs and down year-to-date. At 3.5 times sales, Hecla isn't exactly bargain-basement material, but when you compare it with Silver Wheaton (NYSE: SLW) at 23 times revenue, or Silver Standard Resources at 78 times, you can see some potential.

CAPS member kahakaiBum felt Hecla sported an attractive price tag:

This is a well managed company, through the recession and otherwise. Financial look good and the share price has dropped to a place where I will be making my initial purchase. It may drop a little further. That is just an opportunity to pick up a few more shares!

Dim the lights
In a departure from previous earnings reports that showed consumers scooping up laptops to help drive profits, the big earnings report out of Intel (Nasdaq: INTC) yesterday said companies were now buying server systems, too. SanDisk, which makes flash memory, was helped by the report -- as was most of the tech sector -- but there are indications the memory maker is seeing good times all on its own.

It recently reported it would be operating a new flash memory plant with Toshiba, the world's second-biggest NAND chip maker behind Samsung. To me, that indicates an underlying demand for product that extends beyond what Intel reports.

CAPS member IronChef256 says that regardless of the economy's twists and turns, SanDisk is fundamentally sound:

They are sitting on loads of cash. They have over 2.5 billion in cash and liabilities of only 325 million that they are paying down at regular intervals. Whatever happens Sandisk will be able to handle it.

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.