(FORTUNE Magazine) – Sweet surprises: If you liked them as a kid, you'll love them as an investor. As earnings for the last quarter of 1990 roll out, betting on companies that surpass analysts' estimates can give you stock market returns that won't melt away in the months ahead. Studies -- and recent performances of the stocks below -- show you'll beat the market, which is already up sharply on the strength of a powerful 16.7% rally in the Standard & Poor's 500 index since January 16. And with recession still upon us, earnings-backed staying power can be especially appealing should stocks quiver on negative news. Granted, it won't be easy to spot the gainers: According to Zacks Investment Research of Chicago, negative earnings surprises have been far more frequent as corporate profits fall victim to recession. Of the 922 companies Zacks follows that reported quarterly earnings in January, 36% released results that were 10% or more below predictions, vs. just 19% with positive surprises. But however sparse, the good-news buys are rich and diverse enough to satisfy any level of risk. One believer who's churned big profits on this strategy is Harry Hutzler, who manages both the AIM Constellation and the AIM Weingarten funds. Roughly three-quarters of his aggressive AIM Constellation portfolio consists of stocks bought on earnings surprises. The more conservative AIM Weingarten, a growth fund, holds half that. According to rankings by Morningstar Inc., each fund is No. 1 in its category over the past five years ended December 31, with average annual returns of 15.3% for Constellation and 17.0% for Weingarten, vs. 13.2% for the S&P 500. Hutzler's results suggest that earnings pops don't just fizzle out. ''By all indications,'' he says, ''stocks with earnings surprises outperform the market in the three months that follow by an average of 5%. The initial spurt slows gradually, so the stocks are still good buys weeks after the numbers are released.'' Even better, he adds, earnings surprises tend to recur in subsequent quarters. Explains Hutzler's partner Jonathan Schoolar: ''It takes a while for analysts to adjust their perceptions. It is human nature to be stubborn.'' One company that supports the theory resoundingly is U.S. Healthcare, which owns and operates health maintenance organizations (HMOs) in the Northeast. Hutzler and Schoolar first bought the stock in April of 1990 at $13.25 a share, after the first quarter's earnings came in 25% above analysts' expectations. Every quarter since, the company has exceeded predictions: first by 16%, then 33%, and most recently 66%. The stock, now at $39.50, has nearly tripled in less than a year to new highs, and is still on a roll. Healthcare analyst Kenneth Abramowitz at Sanford C. Bernstein & Co. likes U.S. Healthcare because of its dominant market share in the Northeast, its ongoing efforts to improve the quality of care, and conservative accounting practices. Why the misread on earnings? Says he: ''Our estimates are based on guesses about the prices the company will charge for membership and on cost containment. Margins have been awfully good lately. We've guessed wrong.'' U.S. Healthcare recently traded at 18.8 times his 1991 estimate of $2.10 a share. Another repeater in the AIM portfolios is property and casualty insurer Chubb, purchased at $40 after it released third-quarter numbers that beat the experts by 22%. Better-than-expected profit margins on exceptionally strong underwriting results led to a surprise follow-through in the fourth quarter, says Hutzler, and should propel the stock. A solid balance sheet and zero junk bonds in its investment portfolio add a margin of safety. Hutzler is looking for 1991 earnings to reach $6.50 a share; the shares recently traded at $70.25. Even highly leveraged companies, which are most often measured by cash flow, not earnings, can turn in results that merit a second look. Supermarket retailer Kroger, with its stub of equity and $4.65 billion in long-term debt, did just that, beating earnings estimates by 78%. Says Oppenheimer food retailing analyst Edward Comeau: ''It's important to remember that high debt can magnify earnings per share. Even so, Kroger's fourth-quarter numbers were unusually strong.'' Comeau was looking for operating cash flow to increase 3% to 4%, and the company reported a gain of 15.7%. Says he: ''Clearly they are weathering the recession far better than most other food retailers.'' The stock, recently at $20.75, was trading at 16 times Comeau's 1991 earnings estimate of $1.30 a share. Technology stocks provided one of the few cornucopias of earnings surprises. Says computer analyst Peter Rogers of Robertson Stephens & Co. in San Francisco: ''A year ago Apple Computer was virtually written off on Wall Street as having lost its franchise. But its new product line of low-end desktop computers, priced between $1,000 and $4,000, has hit a sweet spot in the market. The white-collar work force buys them for their homes.'' Rogers is looking for earnings per share to increase 26% this year to $4.75. The stock recently traded at $60. The resuscitation of Apple was also good news for Adobe Systems, another earnings surpriser. Adobe designs software to enhance the printing and display quality of text and graphics. The dominance of its PostScript software in desktop publishing is indisputable, but the company's dependence on sales to original equipment manufacturers like Apple, which accounts for about one- quarter of revenues, makes the stock volatile. Bruce Lupatkin, co-head of technology strategy at Hambrecht & Quist, thinks the company's fortunes are rosy, based on introductions of new programs that enhance the graphic quality of low-end printers and software systems like Microsoft's Windows. He expects earnings per share to grow 28% this year to $2.35. The stock recently traded at 19 times that, or $44.25 per share. If you want to keep tabs on earnings surprises, you can tap into Zacks's universe of earnings forecasts through databases like Dow Jones News/ Retrieval.

CHART: NOT AVAILABLE CREDIT: Zacks Investment Research Inc. CAPTION: SAVORY SURPRISES When quarterly earnings come in higher than analysts' estimates, stocks often take off and beat the market, as these five examples attest.