3 Stocks That Blew the Market Away

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Why settle for ordinary quarterly reports?

I believe that a stock's biggest factor in beating the market is to first beat the market's expectations. That's why I devote this space every week to reviewing three companies that have humbled the prognosticators. Leaving Wall Street's pros with puzzled expressions usually means that these companies had more in the tank than expected, 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 Oracle (Nasdaq: ORCL). The enterprise-software giant earned $0.46 a share on a non-GAAP basis in its latest quarter. That's just shy of the $0.47 a share that Larry Ellison's company delivered a year ago, but it's comfortably ahead of Wall Street's bottom-line target of $0.44.

Investors shouldn't be surprised. Oracle doesn't miss. It has met or exceeded analyst estimates on a quarterly basis for several years. But now it wants to be the top dog in cloud computing? That may come as news to the companies it will have to pass, including salesforce.com (NYSE: CRM), but Ellison's been known to get what he wants, and clearly without disrupting investor expectations along the way.

America's Car-Mart (Nasdaq: CRMT) is another topper. It posted a profit of $0.43 a share in its latest quarter, pulling up ahead of Mr. Market's parking spot at $0.38. Selling cars may seem like a lousy business in this environment, but America's Car-Mart sets itself apart from new-car titan AutoNation (NYSE: AN) and even the haggle-free reseller CarMax (NYSE: KMX) by keying in on the low end of the distressed-used-car market. It's in somewhat of a sweet spot in a soft economy, and that's the reason I preferred the stock over shares of GM earlier this year.

Finally, we have Steelcase (NYSE: SCS) outsmarting the pros. The office-furniture maker broke even in its fiscal first quarter. This may not be enough to break out the party hats in the corporate break room, but Wall Street was expecting a deficit of $0.14 a share for the period. Steelcase and rival Herman Miller (Nasdaq: MLHR) have both surpassed net income expectations. That's huge. It indicates that companies aren't as afraid to order new furniture as we may have feared. 

So keep watching the companies that surpass expectations, since the market rewards the overachievers. That's the kind of story we look for in the Rule Breakers newsletter service. Want in? Check out a 30-day trial subscription. And come back next Monday to learn about more stocks that blew the market away.