3 Stocks That Blew the Market Away

Don't 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 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 SMART Modular (Nasdaq: SMOD  ) . The maker of memory modules and solid state storage products delivered an adjusted profit of $0.08 a share, well shy of the adjusted $0.23 a share it posted a year earlier but just ahead of the $0.07 a share that Wall Street was targeting. The stock's had a good run this year, as investors sense that DRAM price erosion is nearing an end.

Red Hat (NYSE: RHT  ) is really coming into its own with its subscription-based open-source platform. The fast-growing enterprise software posted $0.26 a share in adjusted earnings, comfortably above the $0.22 a share that analysts were expecting. It was generally a good week for software as Oracle (Nasdaq: ORCL  ) , Saba (Nasdaq: SABA  ) , and Adobe (Nasdaq: ADBE  ) also clocked in just ahead of the pros.

Finally, we have credit card giant Discover Financial Services (NYSE: DFS  ) charging past Mr. Market. Discover's quarterly profit of $0.84 a share smoked past analysts perched at the $0.60 a share mark. There was $24 billion charged on Discover plastic during the quarter, 7% ahead of what was swiped a year earlier. Despite the uptick in consumerism, Discover's credit quality has improved nicely with the net charge-off rate continuing to decline.

It's important to keep watching the 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.

Discover Financial Services is a Motley Fool Inside Value pick. Adobe Systems is a Motley Fool Stock Advisor recommendation. Motley Fool Options has recommended a diagonal call position on Adobe Systems. The Fool owns shares of Oracle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz is a fan of toppers. He does not own shares in any of the stocks in this column. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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