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 Inteliquent (NASDAQ:IQNT). The company posted a quarterly profit of $0.21 a share, stunning investors bracing for a small loss.
The good news didn't stop there. Inteliquent also announced the sale of its global data business, allowing it to focus on its higher-margin voice services business. The move will naturally result in a top-line hit going forward, but adjusted EBITDA will improve dramatically.
InvenSense (NYSE:INVN) also rattled higher. The motion sensor specialist saw its quarterly profit more than double to $0.15 a share, just ahead of the $0.14 a share that analysts were ambitiously projecting.
InvenSense was initially seen as a play on motion-based video game controllers, but smartphone and tablet products now make up more than 80% of the company's business.
Finally, we have Trex (NYSE:TREX) investors knocking on faux wood. The leading maker of wood-alternative decking and railing products saw its quarterly profit soar 70% to $1.25 a share. Trex's record quarterly earnings clocked in well ahead of the $1.12 a share that the pros were targeting.
Trex's strong performance wasn't really a surprise. Lumber Liquidators -- the country's leading hardwood flooring retailer -- had also posted blowout quarterly results a week earlier. Trex and Lumber Liquidators are benefiting from homeowner confidence as property prices begin to move higher.
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.