Beating the Street isn't a crime. If anything, it's punishable by a sentence of higher share prices. That's because when even Wall Street's finest analysts underestimate what a company is capable of earning, it may lead to more welcome 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 Tweeter Home Entertainment
Last week, the company posted fiscal first-quarter earnings of $0.59 a share. That was well above the $0.23 per share it had earned a year earlier and more than double the $0.28 showing that analysts had been expecting.
Tweeter has been a neglected stock for some pretty good reasons. It has struggled to turn a profit outside the strong holiday quarters. It has also been closing some of its weaker stores. That explains why same-store sales are actually coming in stronger than overall sales growth lately. Still, this is the kind of blowout quarter that often helps a company ramp up its credibility. Let's see what Tweeter can do as it heads into the three seasonally sluggish quarters.
Sure, that's lower-margin turf than the company's flagship metasearch business provides, but it gives the company two interesting growth avenues, and it's undervalued on both counts.
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, because 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 Monday to learn about more stocks that blew the market away.
Longtime Fool contributor Rick Munarriz is a fan of toppers. He does own shares in Netflix. The Fool has a disclosure policy. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.