In these dour economic times, Mr. Market seems to enjoy dogpiling on any stock that dares to fall short of analysts' estimates. To defy that trend, we're here to celebrate stocks that didn't merely meet Wall Street's predictions but laughed in analysts' faces, by leaving their miserly forecasts in the dust. The companies below all soundly trounced earnings estimates by 20% or more in the last quarter:
|
Company
|
CAPS Rating (out of 5)
|
EPS Surprise
|
Estimated EPS % Growth, Current Quarter
|
Estimated 5-Year Growth
|
|
Advanced Micro Devices (NYSE: AMD )
|
**
|
57%
|
75%
|
7%
|
|
Evergreen Solar (Nasdaq: ESLR )
|
***
|
25%
|
81%
|
18%
|
|
JPMorgan Chase (NYSE: JPM )
|
**
|
58%
|
814%
|
12%
|
|
Newmont Mining (NYSE: NEM )
|
***
|
44%
|
142%
|
10%
|
|
RF Micro Devices (Nasdaq: RFMD )
|
****
|
44%
|
340%
|
15%
|
Source: Yahoo! Finance; NC=not calculable.
Nonetheless, beating estimates isn't enough to make a stock a winner. Analysts are notoriously lousy at forecasting results, and one-time items can sometimes push earnings over the top. Wall Street professionals typically don't include such extraordinary events in their forecasts.
Rather than focusing only on the past, we'll check on whether analysts have a bead on future performance. With help from Motley Fool CAPS, we'll see which of the companies listed above will have the last laugh.
The joke's on them
Although Advanced Micro Devices investors can rightly ignore the drama developing out of the Galleon Group hedge fund scandal, they still need to pay attention to whether Intel (Nasdaq: INTC ) will silently move in for the kill, like a Navy SEAL. It seems such a long time ago that AMD had the potential to overthrow its rival's chip supremacy.
However, AMD bulls have an argument for why an Intel move has never happened. Intel was paying off customers -- for instance, Dell and Hewlett-Packard (NYSE: HPQ ) -- to keep AMD out, according to a lawsuit that New York state's attorney general filed against Intel. The emails that the attorney general uncovered show what AMD fans have always known: Its products were superior to Intel's by a wide margin, enough to cause even Dell's founder to allegedly blast Intel for being so behind the technological curve. According to the legal documents, HP was willing to forgo AMD chips in its products because, financially, the company couldn't make it without Intel's money.
Intel, of course, denies the allegations and says the suit simply rehashes the claims that European and other foreign regulators have made. Intel is already defending itself against from those charges, and it has referred to the payments as "rebates." Yet after all this time, can even a verdict in AMD's favor allow it to make incursions into Intel's 82% market share? That system of payments to Dell, for example, fell apart as far back as 2006, yet AMD's share fell to 17.8% in the latest quarter, from 18.5% in the second.
CAPS member DWade1234 sees AMD's technological superiority keeping it in the game, while jrod87 offers a practical perspective:
AMD is a pickle for most people. Why AMD [and] why not Intel? I hear this [a lot]. My response [is that AMD is the] Best bang for your buck and the best chance to really hit it big when (in my opinion) the great tech rally of my [lifetime] hits! I'm looking long term here about 10-12 years and I know Intel will do ok and have a bigger share of the market...BUT at [$5-$7] a share you will see massive returns percent wise vs. Intel.
Whatever advantages AMD once had, however, highly rated CAPS All-Star japeel doesn't see it anymore and says the company faces even more competition in the coming months:
I see nothing but red ink on that balance sheet. ...
They have cash but they are [selling] their currently "better" card at a loss, vs the competition. When [Nvidia's Fermi] hits the streets at a profit next year, along with [Tegra] and Ion finally getting traction I don't see much positive for them to be honest.
If AMD can finagle payments out of this Intel debacle, it would at least be able to use them to pay down some of its $5.7 billion in debt. And with the Semiconductor Industry Association forecasting 10% growth in chip sales next year and 8% the year after, AMD might be able to improve its industry position if the competitive reins can be tightened on Intel.
I'm heading over to the Advanced Micro Device's CAPS page and rating it to outperform the market. Let me know in the comments section below whether you agree with this assessment, and then head over to CAPS and add your voice to the 3,400-plus members who've already had their say on the chipmaker.
Foolish takeaway
Thus far, the market's rally has been mostly fueled by low-quality stocks. Got a different take on AMD? If you think there's some funny business afoot, let us know -- head over to Motley Fool CAPS and sound off.
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