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 magicJack VocalTec (CALL). The provider of Web-based telephone service saw its shares post double-digit gains during an otherwise uninspiring trading week after delivering blowout quarterly results. magicJack's revenue soared 56%, and its profit of $0.91 a share before one-time items was well ahead of $0.51 a share that analysts were forecasting.
Everyone knows that homeowners are getting rid of their landlines, but a story that isn't necessarily being told is that they aren't always just relying entirely on mobile. A lot of penny-pinching consumers are replacing their hardwired telephones with cheaper Internet phone services, and that's where magicJack is taking off.
We also have Monsanto (MON) with a healthier harvest. The controversial agribusiness giant saw its stock hit a fresh 52-week high after posting a quarterly profit of $2.73 a share, well ahead of both the $2.28 a share it posted a year earlier and the $2.58 a share that the market was banking on this time around.
The strong report and rosy near-term outlook led the analysts at Wells Fargo to boost their price target on Monsanto's stock.
Finally, we have WD-40 (WDFC -0.97%) lubricating the squeaky wheel of naysayers. The company behind the namesake lubricant and other popular cleaners and cleansers may have posted flattish net sales and earnings growth, but Wall Street was banking on significant decline on the bottom line.
WD-40's profit of $0.66 a share landed well ahead of the $0.56 a share that the market was targeting.
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.