Why settle for ordinary quarterly reports? Every week, I examine three companies that beat market expectations. I believe this outperformance is the biggest factor in a stock's odds of beating the market.
Leaving Wall Street's pros with puzzled looks on their faces can be a good thing. It usually means that the companies have more in the tank than analysts figured. 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 99 Cents Only (NYSE: NDN). The retailer with sub-buck pricing earned $0.10 a share in its latest quarter. Wall Street was only expecting a profit of $0.04 a share. Thriftiness is an important theme with consumers these days. Chains like Big Lots (NYSE: BIG) and Dollar Tree (NYSE: DLTR) also beat the pros when their quarterly reports came up last month, proving that it pays to cater to cost-conscious shoppers in this tough economy.
SINA (Nasdaq: SINA) also checked in ahead of Mr. Market. The Chinese new media giant delivered adjusted net income of $0.23 a share. Sure, that's sharply lower than the $0.33 a share it earned a year ago, but investors were braced for a $0.22-a-share showing. SINA's still on track to expand its advertising empire when it acquires key assets of old-school marketing mogul Focus Media (Nasdaq: FMCN) later this year.
Investors should have seen SINA's report coming, though. Despite the weakness in display advertising in China, the company has beaten analysts' estimates for 13 consecutive quarters.
Finally, Pep Boys (NYSE: PBY) zoomed past analyst profit targets with $0.15 a share on the bottom line. Wall Street was expecting marked improvement from the auto parts retailer, but its targets proved to be only half of Pep Boys' actual earnings. In this market, consumers have no problem holding on to their cars longer. That's good news for auto-parts retailers like Pep Boys and AutoZone (NYSE: AZO).
Keep watching the companies that surpass expectations. Over time, it will be a lucrative 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.
Closed for 15 months – opening 10 days only! Get notified ahead of time as our expert portfolio manager invests $1 MILLION in the best opportunities from across The Motley Fool’s premium investment services. This is the first open since August 2008, by invitation only. Enter email below.
Terms & Conditions
RSS Headlines
Fool UK