Money Matters - Simplified

3 Stocks That Blew the Market Away

 Don't settle for ordinary quarterly reports. Every week I take a look at three companies that beat market expectations, since I believe that's the biggest factor in a stock beating the market. Leaving Wall Street's pros with stunned expressions can be a good thing. It usually means that the companies have more in the tank than analysts figured. Capital appreciation typically follows.

 

 Let's take a look at a few companies that humbled the prognosticators over the past few trading days.

We can start with Finisar (Nasdaq: FNSR). The optical networking component maker earned $0.44 a share in its fiscal second quarter, ahead of the $0.38 a share analysts were targeting.

Finisar's fundamentals continue to brighten. Three months ago, Wall Street figured that Finisar would earn $1.00 a share this fiscal year, and $1.22 a share next year. Now the pros are perched on $1.51 a share in profitability for fiscal 2011, and $1.83 a share next year. How can Finisar be trading at only 13 times next year's bottom-line estimate?

We also have Sigma Designs (Nasdaq: SIGM) sitting pretty. The chipset maker for Web-savvy IPTV set-top boxes and high-end televisions earned $0.41 a share in its latest quarter on an adjusted basis. Mr. Market was settling for net income of $0.37 a share. Rival Zoran(Nasdaq: ZRAN) also posted better-than-expected bottom-line results in its latest quarter, confirming that the era of digital television has arrived.

If you had any doubts, check back with Netflix's (Nasdaq: NFLX) third quarter. Two-thirds of its 16.9 million subscribers are now taking advantage of its online streaming service.

Finally we have Collective Brands (NYSE: PSS) fitting just right. The parent company of the Payless ShoeSource chain of low-end footwear popped after delivering third-quarter profits of $0.75 a share. Analysts were settling for net income of $0.51 a share.

Although they say everybody loves a bargain, it's not universal. Big Lots (NYSE: BIG) got smacked Friday after the closeout specialist sorely missed expectations.

It's important to keep watching the companies that surpass expectations. Over time, it will be a lucrative experience for investors as the market rewards the overachievers. That's the kind of surprise that we look for in the Rule Breakers newsletter service. Want in? Check out a 30-day trial subscription.

© 2010 UCLICK L.L.C.