Stock analysts are just about as likely to be right with their forecasts as economists, meteorologists, and fortune tellers are. Actually, while the weatherman might not be right any more often, at least he has a scientific basis for his predictions. Everyone else is about as accurate as monkeys throwing darts or flipping a coin.

Before the advent of Regulation FD, analysts were far more optimistic in their opinions. Today, they tend to think companies will underperform more than they do. State Street Global Advisors says that's because companies are "more explicit" in their guidance, hoping to minimize share-price volatility.

A guide to the future
If that's the case, then let's use the information companies provide to our advantage. When they announce earnings, they also often update guidance for the coming quarter and year. While these reports aren't 100% accurate, a company is presumed to know its business better than anyone. We can reasonably expect that its estimates would be better than most at predicting what the future will bring.

With the help of the Motley Fool CAPS investor-intelligence database, we can tap the collective thinking of more than 100,000 professional and novice investors alike on which stocks they think are best. We'll look at those companies that have guided higher and pair that information with stocks that CAPS believes have the best chance to outperform the market.

Here are five companies that have recently guided higher, coupled with what CAPS investors think:

Company

Period

Analyst Est./Previous Guidance

Updated Guidance

CAPS Rating (Out of 5)

STEC (Nasdaq: STEC)

Q208

$0.06

$0.07-$0.08

****

Herbalife (NYSE: HLF)

Q208

$0.83

$0.89-$0.92

*

Burger King (NYSE: BKC)

FY08

$1.32

$1.33-$1.35

**

Coinstar (Nasdaq: CSTR)

FY08

$0.57

$0.60-$0.75

***

Natus Medical (Nasdaq: BABY)

FY08

$0.67

$0.70-$0.72

*****

Sources: Briefing.com; Motley Fool CAPS.

These are companies showing signs of growing their business, and they're followed by both analysts and the CAPS community. But this isn't a list of stocks to buy; instead, it's a list of suggestions for further research. In that vein, let's take a closer look at one of them.

Don't throw out the bathwater!
Neonatal test manufacturer Natus Medical experienced some growing pains introducing new testing products to the market last quarter. But delays turned into sales after it received FDA approval, and further product introductions ultimately resulted in a 73% increase in profits on a 36% increase in revenue. It's finding huge demand for its new hearing screening unit even as it goes up against competing products from rivals like Cardinal Health (NYSE: CAH) subsidiary Viasys.

While CEO Jim Hawkins feels confident in Natus' ability to hit its goal of 50% earnings growth this year, investors are just as confident that this Motley Fool Hidden Gems recommendation is a solid long-term investment.

CAPS player moey2030 noted last month that with the baby testing company being held in good stead by a number of large institutions, investors ought to do well:

[T]he stock market just opened and the company has already gained 4.82 just within a few hours. [T]here are some major companies that own shares in Natus such as Wells Fargo, Perritt Micro Cap opportunities Fund, and The Boston Company. [T]he company has had a 31.70% increase in the last 12 months along with a 442.80% increase in income growth, this company is going to make a lot of money in a long span of time.

The underserved market for infant medical diagnostic equipment was the ultimate driver of growth for TMFBreakerJava last November, along with Natus' international aspirations:

This company holds a dominant position in medical diagnostic devices for infants. This is an underserved market, especially in Europe and the rest of the world. Smart management and a temporary hit due to a one penny miss earlier this year give us a good entry point. Sales are growing rapidly with lots of room to continue.

Time to adopt this BABY for our portfolio.

Guide on!
Your input can help guide other investors to stocks with bright prospects for growth. Head on over to Motley Fool CAPS and let your voice lead the way.

Natus Medical is a Motley Fool Hidden Gems recommendation. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.