3 Stocks That Blew the Market Away

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 Nike (NYSE: NKE  ) . The athletic footwear giant earned a profit of $0.80 a share in it fiscal second quarter, comfortably ahead of both the $0.71 a share that it earned a year ago and the $0.78 a share that analysts were expecting.

The solid report may come as a surprise to those who figured that penny-pinching shoppers would shy away from Nike's pricey sneakers. It certainly doesn't help that other brand-centric footwear makers like Crocs (Nasdaq: CROX  ) and Heelys (Nasdaq: HLYS  ) have been obliterated over the past year. However, those who know Nike well were ready for the good news. Nike, after all, has now raced past Wall Street's profit targets in six consecutive quarters.

Best Buy (NYSE: BBY  ) is another topper. The retailer earned $0.35 a share before an impairment charge in its latest quarter, way more than analyst guesstimates of $0.25 a share. This isn't the best time for the consumer electronics superstore chain. It earned $0.53 per share a year ago, and the holiday outlook is cautious. It also may have to eat a ton of Guns N' Roses CDs, after its exclusive bet isn't paying off as well as Wal-Mart's (NYSE: WMT  ) gig with AC/DC.

However, Mr. Market clearly was braced for something far more hideous after watching rival Circuit City (OTC BB: CCTYQ.PK) file for bankruptcy protection. Then again, watching the competition shutter stores if not liquidate entirely is probably a good thing for Best Buy down the road.  

Finally, we have Adobe (Nasdaq: ADBE  ) posing pretty. The publishing software titan posted an adjusted profit of $0.60 a share in its final quarter of fiscal 2008. It beat the $0.49 a share it earned a year ago and the $0.58 a share in net income that investors were braced for. The company may have lowered its guidance earlier this month, but it's still a victory no matter how you Photoshop it.

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 Motley Fool Rule Breakers newsletter service. Want in? Check out a 30-day trial subscription.

Come back next Monday to learn about more stocks that blew the market away.