Why settle for ordinary quarterly reports?
I believe that the biggest factor in a stock's ability to beat the market is to beat the market's expectations. That's why I look every week at three companies that have humbled Wall Street's pros. If a company has more in the tank than the analysts figured, capital appreciation often follows.
Let's look, then, at a few companies that humbled the prognosticators over the past few trading days.
We can start with Green Mountain Coffee Roasters (Nasdaq: GMCR ) . The java heavy behind the popular Keurig single-cup brewers and the high-margin K-Cup refills posted a profit of $0.36 a share in its latest quarter, more than double last year's showing. Analysts thought they were aiming high with their bottom-line target of $0.28 a share.
Green Mountain has now zoomed past the pros in each of the past seven quarters. The stock is trading lower this morning, as a result of announcing a secondary stock offering, a dilutive move that makes it harder for the K-Cup darling to keep humiliating Wall Street.
DreamWorks Animation (NYSE: DWA ) also drew well. The computer-animation studio posted net income of $0.30 a share, nearly doubling Mr. Market's expectations of $0.16 a share.
The victory dance isn't entirely self-choreographed. A third of DreamWorks Animation's profit is the result of reworking its licensing deal with video-game developer Activision Blizzard (Nasdaq: ATVI ) . It still would have barreled through the guesstimates, which is more than can be said for family-entertainment behemoth Disney (NYSE: DIS ) , which roughly fell in line with street projections on Thursday.
Finally, we have Buffalo Wild Wings (Nasdaq: BWLD ) flying high. The chicken-wings specialist notched a quarterly profit of $0.39 a share, 24% higher than last year's bottom line. Analysts were settling for net income of just $0.34 a share. The chain has been trouncing expectations since a rare miss four quarters ago.
So keep watching the companies that surpass expectations. Over time, doing so 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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