An earnings report is the equivalent of show-and-tell time in grade school. One by one, companies step up and tell us what they did over the past few months, and then the market reacts. Usually, Wall Street can just snooze through the presentations, because analysts are usually pretty sharp bean-counters. The key is to watch for the times when they underestimate a company's earnings power. Sniff around, and you may uncover stocks that will continue to outperform the market until the analysts catch up.
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 Motley Fool Stock Advisor recommendation Family Dollar
The key here was an aggressive share buyback that swallowed up 4 million shares and fueled a 16% spike in earnings per share. It's still a market-thumping victory for the chain, even if one has to wonder whether Wall Street was asleep at the wheel in terms of accounting for the stock buyback, or whether it was able to bake all of that in and figure that net margins would have contracted even more.
Then we had FedEx
So keep watching for the companies that lap expectations. Over time, it will be a rewarding experience for investors. It's the kind of surprise that market-watchers relish in the Rule Breakers newsletter service, where the 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.
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 Fool has a disclosure policy. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.