The recession may be ending, but don't expect consumers to change their behavior any time soon. That means less spending and a thirst for deals and discounts.

Need proof? Check out the earnings report from discount retailer, Big Lots. The company blasted by analyst estimates for the period ending Oct. 31 on strong sales, real estate gains (not a typo) and lower freight expenses.

Excluding the gain on a real estate sale, Big Lots earned 27 cents per share versus an expectation of 15 cents. In addition, the company upped its guidance for the fourth quarter to $1.09-$1.14 from prior guidance of $0.99-$1.04.

Investors are cheering the news and sending shares of Big Lots (BIG) up more than 15% today. Considering that the stock was already up more than 60% this year, this move is no small feat.

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In an article I wrote at the end of last year, I suggested that BIG was a buy given its positioning during a severe recession. I can honestly say I had no idea the company would perform this well.

In fact, nobody could have predicted these results, hence the huge gains in the stock. If investors knew what was coming, shares would have been bid up substantially, thereby reducing the gains that have come today.

Now those that own the stock can sit back and happily watch it soar.

In today's report, the company announced that it would be immediately buying back its own stock to the tune of $150 million. That's a big chunk of change for a company valued at $2.25 billion.

Clearly the company believes that shares are undervalued, and I would have to agree with that assessment.

The beauty of emerging from a recession is the power of earnings and the difficulty Wall Street has in predicting future results. While some criticize the beat-the-number mentality of the market, the fact is that beating the number usually justifies and inures a higher stock price.

Investors have done very well by investing in those companies that had the potential to perform well during a recession. Big Lots is a prime example.

Next year, investors will do well by owning the companies that trade for valuations below earnings growth rates. Think of the economy like the slingshot effect of planetary orbits.

Companies are doing much better than Wall Street expects. As a result, shares of companies that beat the number will do quite well in 2010.

At the time of this writing, Jamie Dlugosch did not own shares of BIG in personal or client portfolios.

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