Please ensure Javascript is enabled for purposes of website accessibility

3 Stocks That Blew the Market Away

By Rick Munarriz - Mar 11, 2013 at 9:41AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These three companies posted better than expected earnings last week.

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 (CODI 0.61%).

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 (SWBI 2.97%) 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. (RGR 1.04%) obliterated Wall Street profit targets a week earlier, and the same scenario played out this time around with Smith & Wesson.

Finally, we have Jamba (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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Jamba Stock Quote
Smith & Wesson Brands, Inc. Stock Quote
Smith & Wesson Brands, Inc.
$13.52 (2.97%) $0.39
Compass Diversified Holdings LLC Stock Quote
Compass Diversified Holdings LLC
$21.55 (0.61%) $0.13
Sturm, Ruger & Company, Inc. Stock Quote
Sturm, Ruger & Company, Inc.
$64.31 (1.04%) $0.66

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.