These Stocks Laugh at Wall Street

In these heady economic times, Mr. Market seems to enjoy piling 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 past quarter.

Sometimes a company will be forecast to lose money, but it will upend the analysts' apple cart by recording profits. You sometimes can't actually 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.

Source: Yahoo! Finance and Motley Fool CAPS.

The above three companies beat estimates recently, but that isn't necessarily enough to make the 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!
There's no middle ground with feelings toward the cast of Jersey Shore: You either revel in the exploits of Snooki and The Situation, or you despise their embrace of the "guidette" and fist-pumping lifestyles. So, too, with InterOil, you either believe it's going to generate huge returns in Papua New Guinea, or you feel it's going to end up a spectacular flameout.

OK, I'll admit to a guilty fascination with the hit MTV television series (hey, they're more interesting than any iteration of Real Housewives!), but InterOil? Not so much. It has big plans for what it wants to do (i.e., building a major liquefied natural gas export facility in PNG) while finding higher reservoir levels than anticipated at its Antelope 2 field, thus increasing its estimates of just how large the gas pocket is.

But there remains a lot of uncertainty. InterOil entered into an arrangement with Japanese conglomerate Mitsui to fund and operate its Elk and Antelope fields, but some contend it's a relationship more akin to lender and borrower. And it just obtained a $25 million loan at what could be considered usurious rates since lending is supposed to be super cheap these days.

Hedge fund investor Whitney Tilson has taken a pretty committed short position in the stock because of deteriorating financials, a move causing more than a few CAPS members to pile on. Highly rated CAPS All-Star TMFDeej agrees with the assessment that it's burning through cash at a swift pace, but you can tell us on the InterOil CAPS page whether you agree if it's time to go short.

Light at the end of the tunnel
The Baltic Dry Index -- a number that tracks global shipping prices of dry bulk cargo -- sits well below last year's levels, but it has recovered from the lows hit in July. An economic rebound by China would further improve the CAPS Dry Bulk Shipping sector, which has bucked the market's decline over the past month.

Star Bulk Carriers would benefit as well. After getting its financial house in order, it swung to a second-quarter profit in June, and the stock is up 16% over the past month, making it one of the sector's top performers. Diana Shipping (NYSE: DSX) was down 6%, DryShips (Nasdaq: DRYS) basically broke even, and Eagle Bulk Shipping (Nasdaq: EGLE) was up 6%.

CAPS member jwc082 says he isn't looking for any big moves by Star Bulk, but the fundamentals of the shipper look good.

From a purely fundamental standpoint, the company looks great. Strong dividend, fairly steady earnings, and an excellent price/book ratio. However, I wouldn't put any bets on when it's going to move upward -- but it seems like it's in a very good position to, from a valuation standpoint.

Dim the lights
Priceline.com (Nasdaq: PCLN) surprised everyone when it reported there was still huge demand to be found in the travel industry. While its European and Asian business fared better than its domestic lines, it was generally a broad-based improvement.

Strategic Hotels & Resorts apparently benefitted, too, as corporate lodging demand in the luxury segment helped boost revenue and profit. Even though shares have pulled back from their May highs, Strategic can still be a rocket stock for investors. That makes it ValueDragonStyle's kind of value stock.

A real estate investment trust which owns and asset manages upper upscale and luxury hotels in North America and Europe.

[It] is 39% off its 52W high, but still approx. 800% up from its March 2009 low.
Definitely, my kind of a good value stock.

Yuk 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.