Stocks: How About Some Pleasant Surprises for a Change?

Once again, news arrives that is even worse than our very low expectations.

Friday’s jobs report has economists revising estimates, predicting big declines in economic activity this quarter. Action Economics on Friday revised its estimate for the U.S. gross domestic product from a 4% decline in the fourth quarter to a 5% drop.

Given this gloomy environment, it’s surprising when investors get some unexpectedly good news. Even if the news is specific to particular companies, it’s a reminder that not everything is falling apart.

One example Friday is in a traditional defensive sector. Market pundits often claim “sin stocks” — i.e. companies that offer alcohol, gambling or other vices — do well in recessions. But that’s not always the case.

Brown-Forman Corporation (BFB) is a specialist in alcoholic beverages, including brands like Jack Daniel’s, Southern Comfort, Finlandia, Sonoma-Cutrer and Korbel. It’s not only withstanding the recession (so far) but actually boosting profits and sales. It saw sales jump 4.6% last quarter, also posted higher earnings, raised its fiscal year earnings guidance and authorized the buyback of $250 million in shares.

“Thus far we are doing fine,” Reuters reported that chief executive Paul Varga said on a conference call Friday. “These results also reinforce our belief that premium wines and spirits are an affordable luxury in both good times and bad.”

But the bigger good news surprise came from the troubled financial sector and one of its hardest-hit industries, insurance.

Shares of Hartford Financial Services Group (HIG) doubled after the insurance company said business was looking pretty good after all.

The Hartford terrified investors this year when the credit crisis seemed to be taking a severe toll on the company’s balance sheet. Shares had once traded above $98, but plunged to below $5 in late November.

But on Friday, the Hartford , saying it expects to earn between $4.70 and $4.90 per share, up from a range of $4.30 to $4.50 previously. Also, at an investor meeting, Hartford executives said the firm has plenty of cash. More than $12 billion in cash and other liquid investments means “the Hartford is well-capitalized and has ample liquidity,” chairman and chief executive Ramani Ayer said in a statement.

Though Friday’s jobs report was jarring, not all of the investors’ surprises need to be unpleasant.

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