Don't settle for ordinary quarterly reports.
Every week, I take a look at three companies that beat market expectations, since I believe that it's the biggest factor in a stock beating the market. Leaving Wall Street's pros with stunned expressions can be a good thing. It usually means that the companies have more in the tank than analysts figured. Capital appreciation typically follows.
Let's take a look at a few companies that humbled the pros over the past few trading days.
We can start with Advanced Micro Devices (NASDAQ:AMD). It isn't easy making a living as a microprocessor maker when folks aren't buying PCs the way that they used to, and AMD did post its second consecutive quarterly deficit last week. However, AMD's loss of $0.14 a share was considerably better than the $0.20 a share shortfall that analysts were forecasting. It's the first time in three quarters that AMD didn't disappoint on the bottom line.
Investors probably could have seen this coming. Larger rival Intel had also come through with better-than-expected bottom-line results earlier this month.
AMD isn't perfect. Losses will continue in the near term and revenue is going the wrong way. However, it could be worse, and that relief was enough to send the stock 16% higher last week.
InvenSense (NYSE:INVN) also surpassed expectations. The maker of gyroscope and accelerometer motion-based controls got moving with a quarterly profit of $0.19 a share. Wall Street was banking on net income of $0.17 a share.
InvenSense also moved nicely higher on the upbeat earnings news, closing out the week with a 20% pop.
Finally, we have Cree (NASDAQ:CREE) also posting big gains on strong financials. The LED lighting specialist's stock soared 24% after posting an adjusted profit of $0.32 a share. The market was settling for $0.30 a share on the bottom line. Cree's guidance for the current quarter was also ahead of where the pros were parked.
Moving in the right direction
It's important to keep watching the companies that surpass expectations. Over time, it will be a lucrative experience for investors as the market rewards the overachievers. That's the kind of surprise that we look for in the Rule Breakers newsletter service. Want in? Check out a 30-day trial subscription.