5 Stocks That Beat the Street

If you're not on the lookout for companies blowing past their earnings estimates, you just don't know what you're missing. Nothing beats a company enriching its investors by toppling -- and topping -- Wall Street's bottom line targets. Why? Read on and see.

I normally take a look back at the companies that humbled the prognosticators over the past week, but it was a quiet week on the earnings front this time around. However, I should point out that the one notable company that did report this week -- Luby's (NYSE:LUB) -- did beat the street. The company earned $0.08 a share when analysts were only expecting three pennies per share in profitability. Well done, Luby's.

However, to truly dig into the long-term significance of besting the bean counters, let's look at a few companies that spent all of 2005 staring at Wall Street from the rear-view mirror.

We'll start with Google (NASDAQ:GOOG). Why not? All this company has done since it went public in August of 2004 is make mincemeat out of Wall Street's brightest dart throwers. Let's sneak a peak.

The shares have certainly gone along for the ride. It's easy to imagine the stock taking a serious spill when we get to the point at which analysts finally do manage to lasso a quarterly estimate. Rival Yahoo! (NASDAQ:YHOO) carries a more modest valuation, and the stock has never beaten estimates by more than a pair of pennies.

Apple Computer (NASDAQ:AAPL) was another perpetual topper. Its hot-selling iPods, along with a revival in its computing business, have made the company a steady market thumper lately. It wrapped up fiscal 2005 with a modest fourth-quarter win, but it had lapped analysts handily in the periods leading up to that.

That brings us to Intuitive Surgical (NASDAQ:ISRG). The maker of automated surgical systems hasn't just been assisting surgeons in the operating room. The company has also been cutting up Wall Street's forecasts with crafty precision, thanks to its popular da Vinci robotic arm operating system.

The stock was singled out early in 2005 in the Motley Fool Rule Breakers newsletter service and has more than doubled since then. In fact, Apple and Google also more than doubled in 2005. That's why I've spent the past few Mondays ferreting out the profit toppers in a weekly piece here called 3 Stocks That Blew the Market Away.

If companies keep showing up on the list, quarter after quarter, there's a pretty good chance that the capital appreciation will follow. Wall Street doesn't like to be outsmarted. But that's also why it's clearly a rewarding practice for investors buying into the Roadrunners that are making Wall Street E. Coyote look flat-out silly.

But what happens when these perpetual speedsters stumble? Normally, it's not a good sign. Analysts have caught on. It'll probably be harder to trick them the following quarter. That's my guess, at least.

Then again, that's not always the case. Pixar (NASDAQ:PIXR) had an uncanny knack for blowing past market guesstimates. It wasn't by a little, either, as the company ultimately reported results that were a healthy margin better than the market's expectations. Then the computer animation giant showed a flash of mortality. In the second quarter of 2005, the company had to take down its guidance. The company figured it was likely to earn just $0.10 a share. Unlike past periods during which the company's own public projections were lowball numbers, it wound up being exactly what this Motley Fool Stock Advisor pick reported over the summer.

Was this the end? Was Pixar finally ordinary? Not quite. It bounced back in the third quarter, earning $0.22 a share when the analysts were huddled at just half that amount. In one sequential step, Pixar had lulled the Market whizzes into complacency, only to peel out in front of their satisfied faces.

It doesn't always end this way, but just as an object in motion tends to stay in motion, a market thumper one quarter has a pretty fair shot at being a market thumper the following quarter, as well. But that's not to say that all of them will do so, of course.

For what it's worth, you'll find many stocks that have been recommended to Rule Breakers subscribers to be consistent humblers. Whether it's Intuitive Surgical or Steiner Leisure (NASDAQ:STNR) -- the floating spa specialist that has beaten estimates for 14 of the past 15 quarters -- it's where many ultimate growth stocks hang out until they're discovered by the rest of the investing community. If you want to kick the tires yourself, do yourself a risk-free favor and consider a 30-day trial subscription. It's where you belong. Otherwise, you'll be hanging out with the same camp of analysts that always seem to be left behind.

Longtime Fool contributor Rick Munarriz is a fan of toppers. He does own shares in Pixar. The Foo l has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.