5 Stocks That Laugh at Wall Street

In these heady economic times, Mr. Market seems to enjoy dogpiling on any company that dares to fall short of analysts' estimates. To defy that trend, we're here to celebrate companies that didn't merely meet Wall Street's predictions, but laughed in analysts' faces by leaving their forecasts in the dust. The companies below soundly trounced earnings estimates by 20% or more for the third quarter:

Source: Zacks.com; NC=not calculable. Silver Standard Resources broke even versus an estimated $0.10 loss.

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 whether analysts have a bead on future performance. With help from Motley Fool CAPS, we'll see which of the top companies listed above will have the last laugh.

The joke's on them
The innovations brought on by the movie Avatar certainly advanced hope that 3-D technology will begin to play a more prominent role. You wouldn't have to endure a cheesy slasher film to see a spear poke out of the screen at you. Heck, Sony (NYSE:SNE) and Panasonic are hoping the movie experience helps propel sales of their 3-D TVs this year.

IMAX investors are caught up by the excitement as well, bidding the big-screen maker's valuations higher, which tripled the value of its shares over the past year. IMAX also trades at 25 times next year's earnings.

I saw Avatar in RealD, and Dolby Labs (NYSE:DLB) is also advancing a 3-D cinema technology, which tells me IMAX shares are getting ahead of themselves. IMAX isn't the only one out there trying to capitalize on the renewed interest in the technology, so while it's still a market essentially in its infancy (well, good 3-D technology anyway), the expectations for growth may be overdone.

Some sharp investors, though, think this is only the start for IMAX. CAPS All-Star member cdulan finds the field wide open for tremendous growth.

3-D and IMAX have not only changed the future of the movie business. They have changed the business model of the movie business. IMAX used to be just science documentaries at your local museum. IMAX has made deals with all but one of the major studios to collect 1/3 of the box office take for any feature shown in their theatres. To see Avatar costs $10.50 for a regular adult ticket, but $16.50 for the IMAX experience. Just Avatar alone will put them in the black for 2009.

Yet IMAX still has a lot of catching up to do. RealD has more than 4,800 3-D theater installations (and more than 9,500 screens under contract), while IMAX had just over 400 theaters as of its latest quarterly report. And though Dolby's systems are only just gaining traction, they can use existing white screens theater owners already have installed, making Dolby a better value proposition.

Because much of IMAX's growth lately has been with its smaller-screen format (which are still expensive for theater owners at around $1.5 million), moviegoers aren't necessarily getting that IMAX big-screen experience either, although they're still paying a premium for tickets. I'm thinking there will be less enthusiasm for large numbers of theater conversions.

Did you see Avatar in one of the 3-D formats? Share the experience on the IMAX CAPS page and tell us what you think about this big-screen star.

Yukking it up
The market's rally has changed from being mostly fueled by low-quality stocks to dragging most others along, based on lower year-over-year comparables. If you think there's some funny business afoot, let us know -- head over to Motley Fool CAPS and sound off.