Why settle for ordinary quarterly reports?
I take a look at three companies that beat market expectations every week, 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 Sohu.com (Nasdaq: SOHU). The Chinese new media speedster earned $1.45 a share in its latest quarter, ahead of both the $0.39 a share it earned a year earlier and the $1.16 a share that Wall Street was looking for.
Sohu's biggest growth has come from its successful entry into the multiplayer fantasy game market. Despite the presence of entrenched players like NetEase (Nasdaq: NTES), Giant Interactive (NYSE: GA), and Perfect World (Nasdaq: PWRD), the market is growing so quickly that there can be several winners.
Ctrip.com (Nasdaq: CTRP) is another topper. China's leading travel portal didn't have a stellar quarter. Revenue rose just 11%. Earnings actually fell slightly to $0.26 a share. However, it was enough to beat analyst guesstimates of $0.24 a share.
Ctrip spooked the market with its lackluster outlook. It is looking for revenue in the current quarter to clock in just 5% to 10% ahead of last year. Then again, did you ever think that Ctrip would be trading at just 20 times forward earnings estimates? Did I mention that a big portion of its market cap -- around 15% or so -- is now in cash? Once growth gets back on track at the travel site, shareholders will be rewarded.
Finally, we have Buffalo Wild Wings (Nasdaq: BWLD) flying high. The chicken wings specialist was one of several restaurant stocks posting better-than-expected results last week. Earnings grew 28% to $0.43 a share in its latest quarter. Wing-gnoshing analysts were willing to settle for net income of $0.39 a share. Most eatery stocks are struggling, so pay attention to those bucking the trend like Buffalo Wild Wings.
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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