Why settle for ordinary quarterly reports?
I take a look every week at three companies that beat market expectations, since I believe that it's the biggest factor in a stock beating the market. Leaving Wall Street's pros with quizzical looks on their faces can be a good thing. It usually means that the companies have more in the tank than analysts figured and capital appreciation often follows.
Let's take a look at a few companies that humbled the prognosticators over the past few trading days.
We can start with Home Depot (NYSE: HD ) . The home improvement superstore chain finally gave fans of the Orange Apron something to cheer about, earning $0.45 a share in its latest quarter. Yes, it's lower than the $0.59 a share it rang up last year, but it's well ahead of the $0.38-a-share profit that analysts were looking for.
Now that Home Depot and Lowe's (NYSE: LOW ) have scored market-thumping quarters, a logical conclusion is that pessimism in the retailing niche was overblown. Home Depot and Lowe's still have a way to go, naturally, but they may have bottomed out.
ReneSola (NYSE: SOL ) also delivered sunny profitability, posting net income of $0.46 a share when the market was braced for just $0.36 a share. There are a few clouds on the horizon, unfortunately. The maker of wafers used in solar energy cells has bumped up against a slowdown, with many solar cell makers reneging on their purchase contracts. The news led many analysts to shave their near-term profit projections despite the third-quarter win.
Finally, who says mall retail is dead? Several suburban staples like Hot Topic (Nasdaq: HOTT ) , Dick's Sporting Goods (NYSE: DKS ) , and Gap (NYSE: GPS ) actually posted better-than-expected quarterly results this week. However, the real trouncing in this space came from Tween Brands (NYSE: TWB ) .
The apparel chain, which markets toward preteen girls, earned $0.26 a share in the third quarter. Wall Street was settling in for a $0.16-a-share profit. The holidays will be a challenging time for all mall shops, but there are plenty of winners if you know where to look.
So, keep watching the companies that top expectations. Over time, it will be a rewarding 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.
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