Wall Street estimates are interesting. The pros are often pretty sharp in figuring out what a company is likely to earn, often down to the penny. But what about companies doing so well that even a sea of studious model-crunching MBAs can't figure them out?
That can often spell opportunity for you and me, as analysts scramble to assess the company's true earnings power. These are the type of stocks worth digging into, if only because they are often in a good position to repeat the feat the following quarter. Let's take a closer look at a few of the companies that humbled the prognosticators this past week.
We'll start with Warner Music Group
Last week, Pantry announced earnings of $1.12 a share in the company's final quarter of fiscal 2005. That was much better than the $0.96 mark upon which Wall Street was banking. Even more impressively, Pantry's results included $0.22 a share in charges tied to hurricane-related losses. The company is now looking to earn between $2.80 and $2.90 a share in its new fiscal year. A growth stock trading for a little more than 16 times its current fiscal year profit forecast? That's sweeter than honey-coated sugarcane jerky.
So keep watching the companies that lap expectations. Over time, they may prove to be a rewarding experience for investors. It's the kind of surprise that market watchers relish in the Rule Breakers newsletter service. The Rule Breakers strategy of pursuing ultimate growth stocks has paid off: The newsletter's average 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.
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Longtime Fool contributor Rick Munarriz is a fan of toppers. He does not own shares in any of the companies mentioned in this story. The Foo l 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.