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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 over the past few trading days. If a company has more in the tank than the analysts figured, capital appreciation often follows.
We can start with Dell (Nasdaq: DELL ) . The computer giant posted a fiscal-second-quarter profit of $0.28 a share before one-time charges, good enough to barrel past analyst expectations of $0.23 a share on the bottom line. Revenue also clocked in ahead of Mr. Market's projections.
This isn't a revenue growth story. It will take time before Dell begins growing its top line again. However, the company is committed to eliminating $4 billion in annual costs by the end of the next fiscal year.
Dollar Tree Stores (Nasdaq: DLTR ) hit a 52-week high after the discounter crushed the pros. The thrifty retailer earned $0.63 a share in its latest quarter, comfortably ahead of both the $0.42 it earned a year earlier and the $0.54 guesstimate from Wall Street.
Shoppers love bargains in a dour economy, so it's not a surprise to see Dollar Tree join other discounters such as Big Lots (NYSE: BIG ) , DSW (NYSE: DSW ) , and Tuesday Morning (Nasdaq: TUES ) by checking in with better-than-expected quarterly results in recent days.
Finally, we have Corinthian Colleges (Nasdaq: COCO ) making the grade. The post-secondary educator earned $0.31 a share before severance and impairment charges. The market would have settled for a profit of $0.25 a share. With displaced workers looking to beef up their resumes, it's no wonder that for-profit players such as Corinthian and Apollo Group (Nasdaq: APOL ) are growing nicely.
So keep watching the companies that lap 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.