Don't settle for ordinary quarterly reports.
Each week, I examine three companies that beat market expectations, since I believe that such outperformance is the biggest factor in a stock beating the market. Leaving Wall Street's pros with stunned expressions 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 Copart (Nasdaq: CPRT ) . The operator of the country's largest auction for salvage vehicles put the rubber to the road, delivering a profit of $0.52 per diluted share in its latest quarter. Copart earned $0.48 a share from continuing operations a year ago, and Wall Street was banking on a $0.50 a share showing.
It isn't really a surprise to see Copart motoring along nicely. Last summer's "cash for clunkers" campaign created a glut of cars that were required by law to be scrapped rather than resold as used cars. Ford (NYSE: F ) and even Toyota (NYSE: TM ) continue to post double-digit monthly sales growth, so clearly, there are even more lemons being traded in these days.
United Natural Foods (Nasdaq: UNFI ) is riding the wave of popularity for organic edibles. Fiscal third-quarter profits climbed 15% to $0.45 a share, well ahead of the $0.42 a share that analysts were expecting. United Natural Foods stocks supermarkets with more than 60,000 natural, organic, and specialty products. This market-topping performance was easy to predict, after watching Whole Foods Market (Nasdaq: WFMI ) deliver back-to-back quarters of healthy store-level growth last month.
Finally, we have China Finance Online (Nasdaq: JRJC ) running with the bulls. The operator of a pair of research websites for individual investors in China stunned the market with an adjusted profit of $0.08 a share, fueled by a 20% surge in premium subscribers. Mr. Market figured that China Finance Online would serve up a small loss for the quarter.
It's important to keep watching 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 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.