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2 Stellar Stocks for Earnings Season

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Dave Sterman

NEW YORK ( StreetAuthority) -- Where did the time go? By the end of this week, earnings season will have already reached a crescendo as the largest 1,000 U.S. stocks will have already released quarterly results. The flow of new reports starts to slow down after that.

An early read on the current earnings season shows a clear trend: Roughly 69% of companies are delivering profit results that are better than analysts had expected, according to Thomson Reuters. That's right about in line with the last two quarters.

On an aggregated basis, third-quarter sales are up 10% and profits are up 15%, compared with the same period a year ago. Few would have expected such a decent outcome with all of the headwinds roiling the economy and many industries.

Another factor: Solid quarterly results -- relative to expectations -- are also the result of analysts cutting their forecasts too deeply. As a result, companies only needed to jump over a lower hurdle. And as has been the pattern, forward guidance appears more downbeat, relative to current forecasts.

Still, it's clear that corporate profits are holding up reasonably well in such a tough economic environment. This bodes well for future results if the economy perks up a bit in 2012. So if many companies are doing well, then which companies are doing really well? Those companies should look like solid candidates for your portfolio, at least on the surface.

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