3 Stocks Raising the Bar

No one knows a company better than those who run it. That's why investors will often watch for when insiders are buying company stock or whether companies are buying back their own shares. These can be bullish signs for a company.

Raising earnings or sales guidance for the coming quarter or year is also a bullish sign as over time earnings growth follows sales growth. When a company predicts greater sales profits, we expect its stock price to soon follow.

Sometimes, though, things don't work out as planned, so we'll pair up the increased outlook with the sentiments of the 180,000-member Motley Fool CAPS community. If the best and brightest stock pickers think a company's long-term potential is outstanding, coupled with the company's own improved sentiment, maybe investors should take notice, too.

Here is a list of stocks that have recently raised guidance.

Stock	CAPS Rating (out of 5)	Previous Est.	New Est.	Period
Monsanto (NYSE: MON  )	****	$0.10 - $0.15	$0.15 - $0.20	Q1 2012
Yum! Brands (NYSE: YUM  )	****	$2.83	$2.85	FY 2011
ZAGG (Nasdaq: ZAGG  )	*	$170 million	$175 million	FY 2011

Source: Motley Fool CAPS, company reports.

Don't blindly buy into their heady outlook -- you still need to do some research. Use the announcement as a jumping-off point for additional research.

Raising their voices
Weather patterns tend to vacillate between the water-warming phenomenon known as El Nino and its cooling sibling La Nina. South America is currently experiencing extreme dry weather as a result of the La Nina oscillation, which is affecting corn crop prices as water deficiency hurts seed germination and development. Corn prices soared the other day as the dry situation in Brazil and Argentina worsened.

Droughts are hardly to be celebrated, but fertilizer companies like CF Industries and Terra Nitrogen (NYSE: TNH  ) were crushed by depressed corn prices, pricing that was affected by weak demand.

Although Monsanto can't do anything about how much corn users want, it's newly deregulated drought-tolerant corn seed ought to help the industry ride out the extremes in weather patterns. Corn is the most widely grown crop in the U.S., with nearly 92 million acres planted this year. It was the promise of the introduction of new products and the strength of its business in South America, particularly in the weather-worn countries of Argentina and Brazil, that led Monsanto to raise its guidance.

With almost 3,000 CAPS members weighing in on the seed maker, 96% believe it will continue to sprout new growth ahead of the market. Add Monsanto to your watchlist to keep abreast of developments, and tell us on the Monsanto CAPS page if it will be resistant to underperforming the indexes.

Yummy returns
International opportunities are also pushing quick-serve restaurant chain Yum! Brands to raise guidance ahead of its full-year earnings. China in particular is expected to enjoy double-digit restaurant growth, leading to a 13% increase in system sales growth (and 5% growth in comps), generating operating profits that will surge 15% higher. The rest of its international portfolio should likewise see better times ahead.

The outlook isn't quite so encouraging in the U.S., where its KFC and Taco Bell chains face a lot more competition from McDonald's (NYSE: MCD  ) , Wendy's (NYSE: WEN  ) , and all the other fast-food and fast-casual chains. For example, it will be slashing the number of company-owned KFC restaurants, primarily by selling them to franchisees, with an eye toward reducing the total by almost two-thirds.

CAPS member pchop123 sees Asian expansion as key to the future even while planning to dine on Yum!'s tasty dividend: "A great yield and making terrific inroads in the emerging markets of Asia"

Add Yum! Brands to your watchlist to be notified as news and developments happen.

Lagging indicator
ZAGG, the company that shields iPad screens from harm with its InvisibleSHIELD screen protectors, saw shares pummeled even after saying it expected sales to hit $175 million this year, up from earlier estimates of $170 million. It marks the third time in the past six months ZAGG upped guidance.

It might seem odd, but investors no doubt were looking at the heavy selling going on by insiders. More than $18 million worth of stock was dumped last week by former employees of iFrogz, the company ZAGG took over, which led to its raising guidance. If they're bailing, why should others stay?

With such a low competitive moat to protect its stock, let alone the iPad, it will need a lot more innovation than just partnering with Logitech (Nasdaq: LOGI  ) as it did earlier this year on a keyboard stand.

I didn't think much of its ability to expand very far when I rated it on CAPS earlier this summer to underperform the market, but tell me in the comments section below or on the ZAGG CAPS page if it can zig while the market zags. Add it to the Fool's free portfolio tracker and keep on top of new partnerships and earnings news as they develop.

Raise your sights
These stocks may have raised expectations, but The Motley Fool found two small-cap stocks that have the potential to deliver multibagger returns based on solid government contracts. You can get instant access to these companies by clicking here -- it's free! But only for a limited time, so hurry.