Don't settle for ordinary quarterly reports.
I take a look at three companies that beat market expectations every week, 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 Compass Diversified Holdings (NYSE:CODI).
Compass came through with a profit of $0.36 a share, well ahead of the $0.27 a share that Wall Street was forecasting.
One can argue that Compass is a hard company for analysts to nail. It owns eight middle-market businesses, and it's an eclectic mini conglomerate. From printed circuit boards to hydration products -- from furniture to gun safes -- Compass is a tricky company to assess. However, Wall Street has now underestimates its profit potential by at least 20% every single quarter over the past year. That's good news for investors.
We also have Smith & Wesson (NASDAQ:AOBC) firing on all cylinders. Profitability more than tripled to $0.26 a share, blowing away the market's $0.23 a share target.
It shouldn't come as a surprise to see Smith & Wesson doing this well. As the country debates the merit of tighter gun control laws, consumers are loading up with weaponry. It wasn't a surprise when peer Sturm, Ruger & Co. (NYSE:RGR) obliterated Wall Street profit targets a week earlier, and the same scenario played out this time around with Smith & Wesson.
Finally, we have Jamba (NASDAQ:JMBA) blending something good. Shares of the smoothie chain operator hit a fresh multi-year high last week after posting mixed quarterly results. The good news came on the bottom line, where Jamba's deficit of $0.09 a share during the seasonally sleepy holiday quarter was actually narrower than the red ink that Wall Street was predicting.
Jamba's loss came after back-to-back profitable quarters, pushing Jamba to its first annual profit since going public eight years ago.
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.
Longtime Fool contributor Rick Munarriz owns shares of Jamba. The Motley Fool owns shares of Sturm, Ruger & Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.