Underpromise, overdeliver.
Those words may not be an actual slogan, but they're a one-two punch to higher share prices. As long as companies trounce expectations, odds are that their share prices will do the same to market averages. Overachieve? Yes. That one is a real word. Follow the overachievers, and you will often discover a world of promising growth stocks.
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 Children's Place (NASDAQ:PLCE). The kiddie apparel retailer saw adjusted profits soar by 48% this past quarter to $0.96 a share. That was a nickel better than analysts had been expecting. By Nathan Slaughter's account, that is the fifth straight time the chain beat Wall Street's targets. There may be a niche trend taking place here -- Gymboree (NASDAQ:GYMB) also walloped the consensus estimate for three straight periods.
Even though most of the 57% top-line spurt at Children's Place can be attributed to the company's assumption of Disney's (NYSE:DIS) fledgling Disney Store business, bottom lines don't lie. The company is growing profits at a healthy clip, and it's doing so with what Disney had figured was a broken concept that it had no problem unloading.
Intuit (NASDAQ:INTU) was another topper. The leader in personal finance software posted a narrower-than-projected loss for its fiscal first quarter. A little red ink is fine for Intuit this time of year, since it's during the next two quarters that the company really rakes it in as copies of Quicken, QuickBooks, and TurboTax fly off the shelves by the data-crunching public during new accounting years, personal budget planning resolutions, and tax time. The smaller deficit and the 20% uptick in sales are what really excited investors of this popular Inside Value recommendation.
BJ's Wholesale Club (NYSE:BJ) is the third company we'll take a closer look at this week. It's not a very common name among investors. Those who fancy warehouse clubs are often drawn to Costco (NASDAQ:COST) or Wal-Mart's (NYSE:WMT) Sam's Club concept. Then again, shoppers may feel the same way, too, and that's why BJ's trades at a discount to its rivals.
The value-minded outfit earned $0.41 a share during the third quarter. That was 24% higher than last year's showing and also comfortably above the market's $0.36 projection. Comps rose by 4% despite a 3% dip in store traffic. That's clearly a mixed bag -- there were fewer shoppers at the wholesale club, but they were spending far more on average than they were at this point last year. Whether that's enough to get you excited about BJ's or not, it's worth noting that the company has beaten analyst expectations during all but one quarter over the past two years.
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; the average Rule Breakers selection has trounced 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. He owns shares in Disney. The Foo l has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
