Beating estimates is a lot more fun than coming up short. Not only does the market reward those stocks in the near term, but it's also a sign that Wall Street isn't up to speed on how well things are going at a particular company. That kind of inefficient market can spell opportunity to the sharp investor.
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 Intuitive Surgical
Granted, a good chunk of that amount came from a one-time tax benefit. Back that out -- as you rightfully should -- and Intuitive earned just $0.66 a share. But that's still way ahead of where Wall Street was left standing.
The company had beaten estimates by an average of 71% through the first three quarters of 2005, and its stock has soared 160% higher since it was first recommended to Rule Breakers subscribers 11 months ago.
Shares actually dipped after the report because of a more somber near-term outlook at Intuitive, but I'm still excited about the sales trend. Instrument and accessory sales rose 78%, more than the 60% uptick in new installations. That means the systems in place are being used more, and more often, as da Vinci continues to gain surgical credibility.
Mattel has been a Philip Durell favorite since he singled out the toymaker for his Inside Value stock newsletter two years ago. The company isn't just playing around these days. After its somewhat healthy report, news broke a few days later of layoffs amounting to about 1% of its workforce in the current quarter.
Keep watching for the companies that lap expectations. It's just the kind of surprise that market watchers relish in our Rule Breakers newsletter service, and 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 does not own shares in any of the companies 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.