2 Stocks That Just Raised the Bar

Offering earnings guidance above analyst expectations is obviously a bullish sign, as over time earnings growth follows sales growth. And when a company predicts greater sales or profits, we expect its stock price to soon follow.

Sometimes things don't work out as planned, though, so we'll pair up the brighter outlook with the sentiments of more than 180,000 members of Motley Fool CAPS. If the best and brightest stock pickers think a company's long-term potential is outstanding, coupled with the company's own improved sentiment, maybe investors should take notice, too.

Here are two stocks that recently raised guidance.

CAPS Rating
(out of 5)

Himax Technologies (NAS: HIMX)


$0.05 EPS

$0.07 EPS

Q1 12

Intuitive Surgical (NAS: ISRG)


24%-26% procedure growth

25%-27% procedure growth

Q1 12

Source: Briefing.com.

Don't blindly buy into their heady outlook -- you still need to do some research. Use the announcement as a jumping-off point for additional research.

Heading up
Can Himax Technologies continue bucking the rising tide of negativity surrounding the LCD market? The answer seems to be a resounding "yes" since the mobile market continues to drive its gains. Where large panel drivers witnessed a 5% decline in last year's fourth quarter, underscoring the pessimism market researchers have for the segment, small- and medium-sized panels -- which would primarily be for smartphones -- witnessed a 40% jump.

In its latest press release about first-quarter sales, Himax didn't break out the numbers, but it said its business bottomed out last year and revenues were strong across all product lines. That would suggest even large panel displays are up. More importantly, they say this is going to be the low point for the year, which is why they raised earnings guidance to $0.07 per share and they anticipate revenues of $166.2 million. That's still down 1% sequentially from the fourth quarter, but it's better than the mid-single-digit decline it previously anticipated.

There's some sense to Himax's outlook. Qualcomm (NAS: QCOM) recently initiated a huge $4 billion share buyback and hiked its dividend on the basis of better growth coming from smartphones: Its chips are in handset devices from everyone from Apple to Research In Motion. And content delivery specialist Akamai (NAS: AKAM) raised its guidance as demand for more content over mobile communication devices increases the need for its acceleration technology.

Although CAPS member line70day wasn't impressed by the revenue and profit trends coming out of Himax, the broader CAPS community seems to think it will bounce off its operational low points, with 97% of those weighing in marking the stock to outperform the broad indexes.

Tell us on the Himax Technologies CAPS page if you think management's got the big picture, then add it to your watchlist to see if this stock goes mobile.

Cutting to the heart of the matter
It was generally acknowledged before Intuitive Surgical released its earnings that the stock was not cheap. Trading for around 45 times trailing earnings and about 30 times next year's profits, the surgical robotics specialist was not a bargain-basement deal.

Yet I bought the stock a couple of weeks before it released details of the first quarter because it wasn't about what Intuitive Surgical had already achieved, but what it could still do in the future. At the end of last year, it had more than 2,100 systems installed and that figure soared to 2,226 in the first quarter. With nearly three-quarters of them in the U.S., that suggests a still-large target market overseas. While that rate of growth might be down slightly from the 24% recorded in the first quarter last year, it represents a much higher rate than the low- to mid-teen increases it was putting up throughout 2011. I don't think investors need to worry that Intuitive Surgical is losing its competitive edge.

And competition there is, though no one is in exactly the same situation. MAKO Surgical (NAS: MAKO) , for example, has taken minimally invasive robotic surgical technology and applied it to knee and hip replacements. Hansen Medical is doing the same thing with catheters.

Despite rivalries on the periphery, CAPS member AliJones says Intuitive Surgical is too far in the lead right now to have to worry about competitors nibbling around the edges:

Intuitive Surgical is revolutionizing the health care industry. Too many barriers to entry and first mover advantage will allow ISRG to continue its growth. Furthermore, Intuitive Surgical has grown to be such a strong competitor that if a threat arises they can purchase the company and discontinue its product, ensuring that the da Vinci machine remains the most technologically advanced medical robot. Such was the case when ISRG purchased Computer Motion (RBOT) and discontinued their product.

Add the surgical specialist to the Fool's free portfolio tracker and tell us on the Intuitive Surgical CAPS page or in the comments section below if the increased outlook (not to mention its stock price) increases your interest or has you preparing to surgically remove it from your portfolio.

Raise your sights
These stocks may have raised expectations, but the smartphone revolution has even wider implications than before. The Motley Fool discovered three more companies quietly cashing in on the smartphone and tablet PC boom. Read the free report "3 Hidden Winners of the iPhone, iPad, and Android Revolution," but hurry because it's available only for a limited time.

At the time thisarticle was published Fool contributorRich Dupreyowns shares of Intuitive Surgical and Apple, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of MAKO Surgical, Qualcomm, Apple, and Intuitive Surgical.Motley Fool newsletter serviceshave recommended buying shares of Apple, MAKO Surgical, and Intuitive Surgical, as well as creating a bull call spread position in Apple. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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