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These Stocks Laugh at Wall Street

By Rich Duprey - Updated Apr 6, 2017 at 12:37PM

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These companies' earnings handily beat analyst forecasts.

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 by leaving their miserly forecasts in the dust. The companies below have all soundly trounced earnings estimates by 20% or more in the last quarter.

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

Company

CAPS Rating
(out of 5)

Last Qtr. EPS Estimate

Last Qtr. EPS Actual

Est. LT Growth

Corning (NYSE: GLW)

*****

$0.42

$0.52

11%

Penn West Energy (NYSE: PWE)

*****

($0.05)

$0.18

N/A

Titanium Metals (NYSE: TIE)

****

$0.03

$0.09

10%

Source: Yahoo! Finance. LT = long-term.

The above three companies beat estimates recently, but that isn't necessarily 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 companies listed above will have the last laugh.

Laugh, clown, laugh!
The upgrade in televisions forced on consumers by the switchover to all-digital broadcast helped LCD glass maker Corning dramatically improve earnings last year. An improving economy early this year helped boost business at AU Optronics and LP Display. But what will push glassmakers to the next level? According to Corning, touchscreen glass for mobile devices will be the industry's next growth driver.

Both 2011 and 2012 are ripe opportunities for Corning's Gorilla Glass product, which is being used on Apple's (Nasdaq: AAPL) iPhone 4. Corning says there are substantial areas for growth, not only from mobile phones, but also home appliances and even autos. The biggest potential area for exponential growth is in LCD televisions. Corning's already counting on double-digit expansion for the next two years in Asia,. That's exactly the why CAPS member dgoldenz is betting that Corning will outperform the market:

Gorilla glass should be big winner with Apple contract for iPhone and expanding use in other products. Good value here.

Be careful, though -- analysts think an economic slowdown will ameliorate some of the more fantastic projections.

Light at the end of the tunnel
With interest rates so low, you might have to start paying Ben Bernanke to keep your money in a bank, investors may be tempted to chase yields to earn a higher return. Real estate investment trusts, because of the way they're structured, pay out most of their profits as dividends, allowing them to put up juicy numbers. Mall operator Simon Property Group (NYSE: SPG) offers a dividend currently yielding 9.3%, but vacancy rates at malls are on the rise, while commercial mortgage REIT NorthStar Realty Finance (NYSE: NRF) yields almost 14%.

Still, chasing yields is a very risky move. Canadian oil and gas producer Penn West Energy would seem a less risky way of catching a decent yield (9% at current prices), and CAPS member nwtracker likes its diversity:

This is an energy dividend play. A large portion of the "foreign Oil" the US uses is from Canada. Plus the Chinese joint venture will strengthen the capital used in development of already owned leases. I love the monthly payments for cash-flow.

Of course, investors need to keep in mind that many of Canada's trusts are undergoing conversion for tax purposes, so the dividends might not be so secure. Penn West plans on converting within the next two years, however, giving you enough time to extract extra cash.

Dim the lights
The eagle has landed, finally. Well, the Boeing (NYSE: BA) Dreamliner 787, anyway. It made its first appearance at the International Air Show in the U.K., and though it's two years behind schedule, the next-generation airplane should reap the rewards of the orders it has taken and will likely get in the future.

That's good news for Titanium Metals, which counts Boeing as one of its top customers, generating 17% of its revenue in 2009. Yet its primary output is also finding new uses in diverse industries, which has helped boost Titanium's share price. It's up more than 50% year to date, and it has risen 120% over the past 12 months. However, CAPS member ArmyRob is looking to its traditional customers to keep shares aloft:

Titanium Metals is benefiting from renewed demand from aerospace customers. Though its first-quarter profit decreased 15%, to $17 million, or 9 cents a share, the results beat analysts' estimates, and revenue grew 6.9%.

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

Apple and Titanium Metals are Motley Fool Stock Advisor choices. Try any of our Foolish newsletter services today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Corning Incorporated Stock Quote
Corning Incorporated
GLW
$36.38 (-2.67%) $-1.00
Titanium Metals Corporation Stock Quote
Titanium Metals Corporation
TIE.DL
Apple Inc. Stock Quote
Apple Inc.
AAPL
$174.55 (0.88%) $1.52
The Boeing Company Stock Quote
The Boeing Company
BA
$167.20 (-2.84%) $-4.88
Simon Property Group, Inc. Stock Quote
Simon Property Group, Inc.
SPG
$112.84 (-1.47%) $-1.68
NorthStar Realty Finance Corp. Stock Quote
NorthStar Realty Finance Corp.
NRF

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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