Four of our portfolio companies announced earnings in the last week or so, and all four beat the outlook expected by Wall Street analysts. First, we’ll take a look at earnings, then I’ll give you a preview of our newest watchlist play:

SPX Corporation (NYSE:SPW) announced earnings this past week, completely obliterating Wall Street’s expectations of 71 cent per share by delivering income of a full dollar for Q2 2010. Revenue numbers fell in line with expectations. Better still, management guided Q3 EPS in the $1 to $1.10 range, exceeding analyst expectations of 89 cents.

With a capital-heavy business model, SPX Corp. took some significant knocks in 2009 as revenues were slow to recover. The numbers announced by the company last week should start to accelerate this stock’s comeback.

Our wholesale power generation play, NRG Energy (NYSE:NRG) has been another stock that’s underperformed the broad market as commodity costs, expensive capital expenditures, and stifled energy demands impacted its financials. Again though, the company surprised analysts with second quarter earnings numbers of 81 cents per share – nearly twice estimates of 42 cents. As with SPX, NRG Energy’s revenues fell largely into line with estimates.

That phenomenon of increasing income and in-line revenues is worth watching – after all, it means that efficiency is improving and margins are widening, two factors that could suggest that a more bullish model is needed for these firms. Ahead of earnings numbers, RBC analysts raised their view of NRG’s shares to outperform, with a price target of $30.

Becton, Dickinson (NYSE:BDX) is another stock that pleased investors with its quarterly numbers, the medical supply giant announced earnings of $1.30 per share. Analysts had hoped for $1.24.

Becton is one of the three stocks that’s currently in negative territory for our Rhino Stock portfolio (coincidentally, NRG is another), but that could soon change. Becton has been getting increasing attention lately, including  an East Coast Asset Management research report on the stock. The hedge fund thinks that Becton investors could see a double-digit upside in the next few quarters thanks to a deep economic moat and substantial misgivings about the stock’s real performance.

I’m inclined to agree (you can download the research report here).

Our best performer for 2010, Berkshire Hathaway (NYSE:BRK.B) announced its earnings numbers on Friday, outpacing earnings expectations despite some derivative losses for the second quarter. While the effects of derivatives were negative, the company saw improvements across most of its business lines, and I’m pleased to see that the rally shares have seen this year are being backed up by fundamental performance.

We’re currently up 21.6% on the position since adding the stock to the Rhino Stock Report’s portfolio in January.

Adding a Financial Stock to The Watchlist

Despite significant economic improvements since 2008, many investors continue to eschew the financial stocks. That’s a big mistake when you consider the fact that many of these firms are still enjoying booming business. But while investor pressures hold shares down temporarily, others could be enjoying a great time to pick up shares.

That’s the case with AllianceBernstein (NYSE:AB), a $2.8 billion asset manager that I’m adding to our Rhino Stock Report watchlist this weekend.

AllianceBernstein invests on behalf of institutional and retail clients in efforts to generate the highest returns possible. In exchange, the company earns asset management fees. But AB isn’t your typical money manager. The company’s massive value prospect, massive dividend, and unique business structure make it a potentially lucrative opportunity right now.

In fact, my valuation model places this stock at between a 16% and 70% discount to where its share prices should be. That’s a disparity that likely won’t last long as AB continues to generate substantial income…

Not so fast – don’t buy shares of AllianceBernstein just yet. I’m completing my due diligence on this stock this week… I’ll have my detailed report (along with buy and sell target prices) to your inbox later this coming week.

Until then, watch out for earnings of Computer Sciences Corp. (NYSE:CSC) on August 11.

Here’s an updated chart for the S&P 500:

The S&P broke above two key resistance levels this week – the blue downtrending trading channel and its 50-day moving average. With this broad index above those two key levels, the market should start to give us some semblance of stability in the near term, particularly if economic news stays relatively muted.

But don’t be lulled into thinking that the worst is over. Stocks still need to clear the 200-day moving average (thin red line) before I’d be willing to believe that we’ll see another meaningful rally. That said, investor sentiment seems to be turning to stocks once again, and where investors see value price appreciation usually follows.

Frankly, added attention on stocks is a good thing – I’ve been concerned for a little while now about the potential of a bubble in bonds. Investors have flocked to the bond market in the last couple of years in an attempt to move from apparently risky investments to less risky ones… but with a slew of problems in sovereign, state, and municipal budgets right now, the potential for government defaults is relatively high.

Here in the U.S., the fact that the ratings agencies continue to rate shaky state and city debt at investment grade levels is something to watch out for. Not all bonds will be impacted by the bubble – corporate borrowings are likely to remain robust after the scrutiny investors put on their equity issues.

But I’ll be watching this issue pretty closely for the rest of the year. States and municipalities need to get their finances in order ASAP.

In the mean time, here’s an update on a few economic items…

Financial Reform: The Senate passed H.R.4173 earlier this week – and President Obama signed it into law on Wednesday. The act ushers in a number of financial reforms and consumer protections, most notably increased regulation and oversight on consumer financial products. Ultimately, though, the new law lacks many important features. It’ll have minimal impact on Wall Street.

Earnings Season Earns Respect: Despite a somewhat inauspicious start to earnings season last week, this week’s accelerated announcement pace has impressed investors. That should be a relieving fact for Main Street, because it means that the private sector is still seeing strong performance in 2010. We’ll see what this means for our portfolio companies…

The Happier Housing Market: Housing numbers released yesterday beat expectations, showing slight growth in home sales and residential real estate prices. These metrics lead the economy right now, so good performance is a great sign for stocks.

Applied Materials Restructures Its Energy Business

Our newest position, Applied Materials (NASDAQ:AMAT), announced Wednesday that they’d be undergoing restructuring for their energy and environmental solutions business and revised their Q3 outlook as a result.

Typically, restructuring is sort of like ripping off a band-aid: it hurts at first, but it ultimately a good thing. In Applied’s case, however, restructuring shouldn’t be as painful as Wall Street expects. Solar has been a thorn in Applied Materials’ side for the last few years as sales stalled and sentiment waned. That’s one of the things I wrote to you about when I recommended the stock last month. But in 2010, things look to change thanks to increased emphasis on solar technology and alternative energy.

Applied is trying to accelerate that growth by trimming underperforming parts of its nascent solar business. Ultimately, the company thinks that they’ll be able to save $100 million annually with the restructuring.

Despite the impressive savings, these changes won’t impact AMAT in a bad way this year. Revised Q3 guidance puts expected numbers on the higher end of the company’s previous target. That’s excellent management at work.

Upcoming Earnings

Becton, Dickinson (NYSE:BDX) is set to announce earnings next week on July 29. I’ll keep a close eye on how our second play of 2010 lives up to expectations.

Best of all, Steven’s making his report completely free of charge for you. Just right click the link below to save a copy to your hard drive.

Click here to download the entire 100-page report right now…

Last year, the stocks and funds selected for the report returned 35.7% year-to-date, versus just 19% from the market. And the report made the #1 spot on Gainers Today’s performance ranking of 120 research firms.

I suspect that BDX, my pick for the report, will see solid growth in 2010 for the reasons detailed in the January 8, 2010 alert sent out to Rhino Stock Report subscribers. If you’re not yet a member, just enter your email address below to sign-up free.