Don't settle for ordinary quarterly reports.

I take a look at three companies that beat market expectations every week, since I believe that it'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 Xyratex (NAS: XRTX) .

The data storage specialist earned $0.42 a share in its fiscal third quarter, blowing out the pros that were targeting a profit of merely $0.17 a share. Xyratex's guidance is cautious given the tenuous nature of the enterprise market, but at least it showed Mr. Market who's boss this time around.

Paychex (NAS: PAYX) is also cashing in on low-balling analysts. The payroll and human resources giant earned $0.41 a share in its latest quarter, ahead of both the $0.36 a share it posted a year earlier and the $0.38 a share the market was expecting.

Paychex is obviously a great pulse check of Corporate America, so the beat is a good thing for more than just Paychex investors.

Finally, we have Jabil Circuit (NYS: JBL) . The contract manufacturer cranked out net income of $0.62 a share. Prognosticators were perched at the $0.56 mark. Jabil also issued a rosy near-term outlook. Strength at Jabil doesn't necessarily mean that things are going well at rivals Sanmina-SCI (NAS: SANM) and Flextronics (NAS: FLEX) , since the company credited its strong performance -- in part -- to landing new customers.

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.

Either way, come back next Monday to learn about more stocks that blew the market away.

If you want to track these stocks to see if they come out ahead next quarter, add them to My Watchlist:

At the time this article was published Motley Fool newsletter services have recommended buying shares of Paychex. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


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