3 Stocks That Blew the Market Away

Earnings are great. I mean, of course they are, but nothing beats earnings season. It won't kick up in earnest until later this month, but now is a good time to start looking for companies that top analyst projections. Blowing the market away often means that even the people paid to follow a company closely have underestimated how well things are going for it. Let's take a closer look at a few of the companies that humbled the prognosticators this past week.

We'll start with Constellation Brands (NYSE:STZ). The liquor cabinet stocker earned $0.52 a share when the market was only expecting a $0.50-per-share showing. As Stephen Simpson pointed out, it wasn't necessarily a blowout quarter for the company. Yes, revenue rose by 17% for the period, but if you back out the recent acquisitions of Mondavi and Ruffino, organic top-line growth came in at a more modest 6%.

However, what intrigues me about this particular report is that if you look at the two previous quarters in fiscal 2006, analysts nailed Constellation's bottom-line production down to the penny. This fiscal third-quarter report is a refreshing break from tradition, with the company lapping targets, even if it's by just a pair of pennies per stub. It's only the second time over the past four fiscal years that Constellation has beaten its quarterly targets by that much or better. This makes the new quarter extremely critical in gauging whether Constellation is ready to break out as a perpetual market-thumper.

Monsanto (NYSE:MON) was another topper. The agricultural bioengineering giant earned $0.22 a share for its fiscal first quarter. That was a huge improvement over last year's per-share profit of $0.13, and comfortably ahead of analysts' $0.19 target. Then again, good things are likely to happen when you top your global sales figure by 31% to hit $1.4 billion.

Walgreen (NYSE:WAG) is the third company that we'll be taking a look at this week. The drugstore chain kicked off its new fiscal year by reporting net income of $0.34 a share. Yes, it was a mere penny aboveWall Street targets, but it came after the company had fallen short three months ago in its final quarter of fiscal 2005. Coming up on the short end of the earnings stick isn't something that investors in the pharmacy chain see too often. After all, Walgreen has posted higher sales and profits for 31 years in a row.

Walgreen may very well be the darling of the drugstore space. Yes, CVS (NYSE:CVS) is a giant, swallowing up smaller chains in a highly fragmented sector begging for consolidation. You also have Rite Aid (NYSE:RAD), even though RAD hasn't exactly been all that rad in some time. And let's not even go into the online drugstore world. Web pharmacy drugstore.com (NASDAQ:DSCM) has failed to carve itself a profitable living in the dot-com world, even though this may be a breakthrough year for the Internet-based operator if it meets analysts' expectations for a profit in 2006. Until proven otherwise, Walgreen has proven itself to be the most consistent pharmacy stock of the lot.

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 trounced the S&P 500's market return. Want in? Check out a 30-day trial subscription.

Either way, come back next week to learn about more stocks that blew the market away.

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. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.