These Stocks Laugh at Wall Street

In these heady 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, leaving their miserly forecasts in the dust. The companies below all soundly trounced earnings estimates by 20% or more in their latest quarter.

Sometimes, a company forecast to lose money will upend the analysts' apple cart by recording profits. You can't actually calculate by how much they beat the estimates (seventh-grade math tells us we can't divide by zero or less!), but it's still useful to understand why they were able to exceed expectations.

Source: Yahoo! Finance

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.

Laugh, clown, laugh!
Don't look for international financiers to urge fiscal restraint from world governments. The World Bank and the International Monetary Fund say China and other global governments risk "shooting their own feet" if they stop binging on stimulus.

Not surprisingly, basic materials companies like China Precision Steel and Aluminum Corp. of China (NYSE: ACH) are expected to reap the windfalls of China's profligate monetary policy, though the risk of inflation and asset bubbles could derail the progress.

China Precision Steel has flown under Wall Street's radar. It trumped expectations in part because there's only one analyst following the company right now. CAPS member Subida says the steelmaker will be able to exploit that weakness:

Don't let the P/E scare you. China Precision Steel has got a clear road ahead to $3.00 in the next six months. (Any China pull back will be beyond this time horizon). Debt/Equity well below 1. An outstanding growth story; note that only one analyst covers this bad boy, and he undershot the company by, well, 500% last quarter. Positive and increasing sales growth figures. It's clarity that's holding this puppy down, but as the quarters roll on, and the cash roles in, the potential for multi-baggin' will show itself.

Measure twice, cut once
The new SEC reserve rules that came online in January surely didn't affect independent oil and gas company's GMX Resources' stock price. That information should have been discounted months before. Yet when you look at its end-of-year report, you can see the impact those rules are having. Reserves fell by almost 100 billion cubic feet equivalent compared to the old measurements.

In addition, GMX's PV-10 value -- a complicated formula to estimate future gross revenue from proved reserves, minus production and future development costs, discounted at 10% -- lost 64% of its value, as lower average natural gas prices hit home.

GMX isn't alone. Petrohawk Energy (NYSE: HK) took a similar hit to PV-10 values, and the rules apply to even industry giants like Chevron. Yet with GMX's shares trading for half of their 52-week highs, CAPS member smith972 thinks they're just too cheap to pass up.

An ill wind blowing
Despite the company topping expectations, CAPS member JackCaps thinks Internap Network Services' management is asleep at the switch, producing only lackluster results for the quarter and year. Yet management says 2009 was a "transitional year" for the data-center operator and Internet traffic router. It's looking to new markets for growth, including content delivery network services. Before you rush to buy in, note that it'll have to face industry leader Akamai Technologies (Nasdaq: AKAM), which handles about 20% of all Internet traffic.

Investors remain bullish, though, with 92% of CAPS members who've rated the Internet traffic cop confident that it'll outperform the broad market averages. You can tell us on the Internap Network Services CAPS page whether you think this stock will get caught up in a traffic jam.

Yukking it up
The market's rally, once mostly fueled by low-quality stocks, now drags most others along, thanks to 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.