Setting up targets and mowing them down isn't just a rewarding game at a shooting gallery. It's an approach that works pretty well with Mr. Market, too. Companies that topple profit projections are usually on to something -- and the pros don't know it just yet. Underestimated companies often wind up producing even more upside surprises in the future.
That said, let's take a closer look at a few of the companies that humbled the prognosticators this past week.
We'll start with Red Hat
Shares surged nearly 30% higher on the news -- and with good reason. The company is experiencing sequential improvement in the current quarter as more corporate customers take a shine to open-source solutions. This comes at a time when information technology spending is awakening from its cyclical slumber. Perfect timing for Red Hat. More nail biting for Microsoft
Rising interest rates and the disturbing trend of interest-only mortgages has many investors sitting on the sidelines when it comes to buying into the homebuilders. They fear a bubble. They believe that real estate prices can't stay buoyant forever. It's why the developers are trading at such low multiples. In the meantime, companies like KB Home
So, keep watching the companies that lap expectations. Over time, it will be a rewarding experience for investors. That's the kind of surprise that market watchers relish in the Rule Breakers newsletter service. The strategy has paid off, as the average Rule Breaker selection has more than tripled the S&P 500's market return. Want in? Check out a 30-day trial subscription.
Either way, come back next Monday to learn about more stocks that blew the market away.
Longtime Fool contributor Rick Munarriz is a fan of toppers, but he does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.