5 Stocks That Laugh at Wall Street

If you read enough business briefs these days, you'd start thinking that a lot of companies are horribly missing estimates. In fact, many companies are doing quite well, thank you very much.

We're here to celebrate those that not only beat Wall Street's predictions but actually laugh in the face of analysts for bringing in such miserly forecasts. The companies below have all soundly trounced earnings estimates by 20% or more in the past quarter

Source: Yahoo! Finance; NM=not meaningful; NA=not available.         

But it's not enough just beating estimates to become a winning stock. Analysts are notoriously lousy at forecasting results, and there could be one-time items that pushed the earnings ahead -- Wall Street professionals typically don't include extraordinary events in their forecasts.

Everyone makes mistakes, so we're not going to look only at the past. We'll also check whether analysts have a bead on future performance by enlisting the help of Motley Fool CAPS, the community-intelligence tool for rating both stocks and the stock pickers. With CAPS, we'll see which of these top companies will have the last laugh.

The joke's on them
Chinese PV cell maker Solarfun Power might have had a good belly laugh over the earnings forecast, but the market wasn't feeling jolly with its warning that average selling prices might have further to fall. Shares have fallen by 20% over the past month because of the prospect that average selling prices might dip below $2 per watt.

Although CAPS member OklaBoston liked the company's "Biggest positive earnings surprise" last month, at least one analyst worries that its agreement with German solar-cell maker Q-Cells might be in jeopardy because of those lower prices. The agreement calls for a minimum of 100 megawatts of PV modules be purchased by Q-Cells, which over just the first five months of the agreement equaled 10% of Solarfun's full-year revenues.

Low prices are a concern when you look at margins, but if it helps the industry move closer to "grid parity" -- the point where solar energy costs the same as fossil fuels -- it may create demand that pushes further adoption of the technology.

Compare Solarfun's P/S ratio with that of PV module makers Suntech Power (NYSE:STP) and Yingli Green Energy (NYSE:YGE), and you can see it trades at just a fraction of either. With strong growth prospects before it, Solarfun doesn't necessarily look like the bad bargain the sell-off made it out to be.

The court jester
Replay it again, Sam. When the stars align -- or is it the satellites? -- fortune smiles down on you. Such is the case with DVR-technology leader TiVo, which not only beat analyst expectations in the quarter but also beat DISH Network senseless in the courtroom. It's also taking on the telco giants that it claims have infringed on its patents. Considering the well-worn path to victory it's already blazed, investors might want to reconsider their bearish viewpoint.

For example, CAPS member Durstand suggests that TiVo is in possession of "aging patents on soon to be obsolete technology," while zeus528 sees danger ahead:

Today the patent office issued an office action in the reexamination of Tivo's so called time warp patent that has generated a good deal of revenue for them. The office action rejected the two claims of Tivo's time warp patent that Echostar had been found to infringe. If these claims are finally held to be invalid then Tivo's competitive advantage and licensing revenue are in significant peril.

Foolish takeaway
Factor in the new deals inked with Best Buy (NYSE:BBY), court-ordered sanctions on patent violators, and the prospects for additional partnerships and eventual acquiescence by the telcos if the patents are upheld, and TMFMileHigh is looking awfully prescient for having suggested last October that TiVo's moat was a lot deeper than people thought. It seems that eventually the market will stop playing the fool and come around to appropriately valuing the stock. In that case, you might be the one getting the last laugh if you climb aboard before it takes off.

Got a different take on Solarfun or TiVo? If you think there's some funny business afoot, let us know by heading over to Motley Fool CAPS and sounding off.