Why settle for ordinary quarterly reports?
Every week I take a look at three companies that beat market expectations, since I believe that'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 AeroVironment (Nasdaq: AVAV ) . The maker of unmanned aircraft vehicles saw its fiscal second-quarter profits rise by 71% to $0.41 a share. Analysts were only looking for earnings of $0.27 a share.
The role that major defense contractors will play in President-elect Barack Obama's White House run remains to be seen, but high-tech companies that provide tactical superiority without harming the troops -- like AeroVironment and all-terrain bomb detecting automaton maker iRobot (Nasdaq: IRBT ) -- should make out nicely.
Shanda Interactive (Nasdaq: SNDA ) is another topper. The pioneer in China's booming online gaming market posted a profit of $0.68 a share in its latest quarter, well ahead of the $0.55 a share that Mr. Market was betting on. Investors shouldn't be surprised here. The company has beaten bottom-line projections for 10 consecutive quarters.
Finally, we have Copart (Nasdaq: CPRT ) revving things up. The auto salvage specialist posted net income of $0.44 a share in its latest quarter, narrowly besting the $0.41 a share it scored a year ago and the $0.43 a share in Wall Street guesstimates.
It may not seem like much of a win, but it'll do in this car-weary market. More conventional outlet providers for new and used cars like AutoNation (NYSE: AN ) and CarMax (NYSE: KMX ) have missed analyst profit targets in their latest quarters, so scrap is golden in retrospect.
So, keep watching the companies that lap 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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