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 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 typically follows.
Let's take a look at a few companies that humbled the prognosticators over the past few trading days.
We can start with CarMax (NYSE: KMX ) . The used car retailer with massive lots and a haggle-free showroom earned $0.33 a share in its latest quarter, well ahead of the $0.25 a share that Wall Street was targeting.
Investors already knew that new cars were selling briskly. Ford (NYSE: F ) and even beleaguered Toyota (NYSE: TM ) have been sporting amazing sales growth lately. However, it was more than reasonable to doubt the health of the resale market. After all, Toyota has been moving cars off the floor through interest-free financing and discounted leases. Won't that eat into secondhand sales? Well, CarMax isn't complaining.
A-Power (Nasdaq: APWR ) also generated better than expected results on the bottom line. The alternative-energy conglomerate's quarterly profit more than doubled to $0.61 a share, excluding charges. Analysts were settling for net income of only $0.41 a share. A-Power's showing is even more impressive when one considers a dilutive late January private placement that was priced at a 15% discount.
Finally we have Dollar General (NYSE: DG ) bucking forward. The discounter's profit of $0.51 a share before one-time items clocked in well ahead of the $0.43 a share that Mr. Market was banking on. Giving thrifty shoppers more bang for their greenbacks makes sense these days, as fellow discounters Big Lots (NYSE: BIG ) and 99 Cents Only (NYSE: NDN ) have also surpassed Wall Street guesstimates in their latest quarters.
It's important to keep watching the companies that surpass expectations. Over time, it will be a rewarding experience for investors as the market rewards the overachievers. That's the kind of surprise that 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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