(FORTUNE Magazine) – What makes a company's stock one of the market's pacesetters? These days, most money managers say, it is earnings, earnings, and more earnings. While the Senate Finance Committee's tax reform bill could lift corporate profits 12%, according to a Salomon Brothers study, the tax package would not take effect until 1987. Meanwhile, finding impressive performers in today's slow- growth economy is a tall order. For many companies, optimistic estimates a few months old are already turning out to be a mirage. In January, Wall Street security analysts expected companies in the Standard & Poor's 500-stock index to show a 1986 earnings gain of 29% on average. By early May, they had knocked that figure down to 20%. Yet for some companies -- a precious few -- the earnings outlook is improving. To ferret them out, FORTUNE enlisted the Institutional Brokers Estimate System (IBES), a service of the brokerage firm Lynch Jones & Ryan that continually culls earnings estimates from more than 2,500 analysts covering 3,400 different companies. Each week the estimates are averaged into a consensus forecast for each company. FORTUNE asked IBES to scan the forecasts and pick out the biggest upward revisions since mid-March. Past studies show that stocks sporting upgraded earnings estimates outperform the market in the months after the word gets around. Some of these stocks, alas, have already taken off. Over the six weeks ended in early May, analysts raised their earnings forecast for sneaker maker Reebok International by 40%. Yet over that same period the stock sprinted ahead more than 50%. FORTUNE excluded from the IBES list any stock that has risen more than 25% since mid-March. The IBES dragnet turns up an eclectic bunch of companies. One of them is Cyprus Minerals, a diversified minerals producer that lost a bundle in 1985 because of heavy one-time write-offs, but appears to be on the verge of a turnaround. Spun off by Amoco in 1985 when mineral prices were in the pits, Cyprus quickly set about cutting costs and using its healthy $100-million-a- year cash flow to go bargain hunting for distressed mining properties. Now one of the lowest-cost producers of coal, copper, and other minerals, Cyprus stands to reap outsize earnings gains on small upticks in raw material prices, which most analysts are expecting. Though Cyprus's stock has doubled over the past 12 months, Peter Anker, a metals and mining analyst at First Boston, believes there's more to come. Security analysts are waiting for the first signs of an improvement in the computer industry. But they have already turned more positive on Apple Computer. Its sales prospects are showing a bit more polish and, more important, the computer maker has pared costs dramatically, sharply reducing staff and consolidating production facilities. The result, according to computer industry analyst Charles Wolf of First Boston, is that Apple's operating profit margins have fattened from 40% of sales in 1985 to 53% this year. The computer industry downturn has zapped the earnings of most semiconductor manufacturers. But two chipmakers, Motorola and General Instrument, appear on their way to a surprisingly good year after a disappointing 1985. Motorola's earnings plunged by 81%, while General Instrument, hit with slumping sales of its cable converters for TV sets and other cable products, posted a loss in the fiscal year that ended February 28. Chipmakers' prospects have been improving lately. Sales are strengthening, and both the sharp drop of the dollar against the Japanese yen and the prospect of new duties on Japanese chips have helped firm up U.S. chipmakers' prices. Clifford Friedman, a semiconductor analyst at Cyrus J. Lawrence who recommends both stocks, notes that Motorola's semiconductor operations moved back in the black in the first quarter, ''sooner than we all thought.'' Two financial companies boast sharply higher earnings estimates for 1986, but for different reasons. Paine Webber, the brokerage firm, pocketed more commission income in the first quarter than most analysts had expected, thanks in part to a sizzling market in stocks and bonds. Perrin Long, a brokerage stock analyst at Lipper Analytical Services, thinks management's efforts to pare costs should keep Paine Webber's earnings on an upward track even if the stock market cools off. The earnings outlook at Guaranty National, a Colorado property and casualty insurer, started improving last year when the company began raising its premiums. Wall Street's forecasters grew even more positive when the insurer completed an $18.5-million stock offering in early May. The company plans to use proceeds to increase its underwriting business substantially. Standard Motor Products, an auto parts maker, is in the midst of an industry-wide shakeout. But analysts foresee a supercharged 31% earnings gain this year. The forecast reflects not only higher-thanexpected product prices in the first quarter, but analysts' expectations of improved profit margins throughout the year. That could send this stock on a rubber-burning run.

CHART: Charging Ahead Despite a slow Seconomy, analysts recently jacked up their earnings estimates fo these seven companies. COMPANY 1985 ANALYSTS' INCREASE IN RECENT Revenues in illions EARNINGS LATEST ANALYSTS' PRICE latest four quarters P R SHARE ESTIMATE 1986 ESTIMATE P/E multiple FOR 1986 SINCE 3/20 Motorola $0.61 $1.81 $0.18 $47.00 5,460.0 25.9 Paine Webber $1.70 2 $2.66 4 $0.32 $37.25 2,165.2 14.0 Apple Computer $0.99 2 $2.24 4 $0.29 $33.25 1,727.4 14.8 General Instrument ($2.07) 3 $0.69 4 $0.08 $21.50 794.3 31.2 Cyprus Minerals ($17.23) $1.94 $0.35 $22.75 751.3 11.7 Standard Motor Products $0.80 $1.05 $0.08 $16.75 248.8 15.9 Guaranty National $0.40 $0.56 $0.05 $8.25 88.9 14.7 1Based on latest estimate. 2Fiscal year ended 9/85. 3Fiscal year ended /86. 4Estimate for current fiscal year.