Good news finds a high StockRank - and now we know why

Over the last 18 months, we’ve been researching three words that show up regularly in trading statements: “ahead of expectations”. When a company makes a positive announcement, the shares often jump that morning, and more often than not, keep drifting in the same direction for months. Of course, the real money to be made is in stocks that say it again and again. Computacenter (CCC) is one such example, with now four positive announcements in a row, and the shares up 140% since last September.

I’ve been an advocate of buying high-ranked shares after a positive announcement - and it’s a strategy that works - but the question I get asked more than others, is how do you find these shares before they make their first positive announcement? Can we predict positive surprises?

Yes we can - but in a roundabout way

We have taken every UK trading update and results statement since the start of 2025 where the news could be classified - that’s about 4,860 announcements - and we’ve marked each as positive (the company beat expectations or raised guidance), negative (it missed or cut) or neither. Then we sorted them by the company's StockRank on the day.

A share ranked over 90 delivered good news 32% of the time and bad news 9% of the time. That’s nearly four pieces of good news for every negative. A share ranked under 40 delivered good news 22% of the time and bad news 16%.

It’s a small edge, but it’s a significant edge. A higher StockRank seems to predict positive surprises. The StockRank knows nothing about the next statement, but it does know three things - the business is likely to be boringly profitable, with shares quite lowly priced, with improving market and analyst sentiment. These are the traits of a stock that’s more likely than not to publish good news.

Computacenter provides a model

For most of 2025 Computacenter's StockRank sat below 75 - not on my radar. But on the 9th September 2025 it published its half-year results - revenue was up 31%, profit down 4%, with a "strong start" to the third quarter. The shares rose 4% on the day - positive, but not wildly eye-catching.

But the next morning the StockRank jumped from 68 to 91. New fundamentals, broker forecasts upgraded, and the momentum rank went from 42 to 84 overnight. Last month we shared research into the StockRanks Jump Effect- and this has turned into a classic example.

From that date on the shares ground higher. Then came a sequence of “beats”. On 22nd January the company said the year was running "ahead of expectations” - the shares moved +10%. On 24th April it said the first half would be "much stronger" than anticipated and raised guidance: another +15%. On the 9th July, it was “ahead of expectations" again, with first-half profit double the year before: up another 7%. And today, another “significantly ahead” announcement.

Of course, there has been a narrative behind the moving share price. There always is. But this one had the word of the year in it “hyperscale”. Computacenter supplies and installs equipment that big cloud companies need for their data centres. It’s North American business went from a “record performance" last September to profits that "nearly doubled" by March. When Nvidia reported last month, Computacenter rose 8% the next morning. And today half-year results are “significantly ahead” of expectations - although the shares are going the other way - whether this is temporary glitch or a top remains to be seen.

Market expectations can be systematically too low

For decades the textbook answer for why cheap shares (value stocks) and rising shares (momentum stocks) beat the market has been that they are “riskier”. You should get paid extra for holding something risky. But it’s quite hard to prove they are. Yes among cheap companies there are some that are financially distressed - but those stocks are easily identified and they have dismal returns. So the reason for the outperformance may not be risk.

But last September some Oxford and Harvard academics tested a new angle. They took every analyst's profit forecast for every American stock over forty years, and asked a question: when cheap shares beat the market, is it because they were risky, or because the forecasts for them were simply too low?

The expectations were systematically too low. Almost all the extra return on cheap shares, and on rising momentum ones, turned out to be the market catching up with unexpected profits. The market is just too negative on cheap, improving companies and too excited about glamorous ones. When results and trading statements come in - expectations get beaten. The title of the paper lays this out - “Finance Without Exotic Risk”. There’s no mysterious risk explanation required. The difference in returns comes down to expectation mistakes. And they are predictable.

How expectation mistakes get corrected

For Computacenter - back in July 2025, the shares were priced at £22 with profit forecasts for 2027 at 197p - a forecast P/E of 11x. Today they are priced at £53 per share with profit forecasts of 241p - a forecast P/E of 21x.. The shares were priced too cheap. Computacenter beat expectations again and again. The belief flipped, the P/E ratio doubled. That’s the market correcting its forecasting mistake - rather than repricing a risk.

Anyway, enough of the theory - if we pull the StockRank apart we can see which part does which job on good news.

• Momentum predicts beats: Earnings surprises tend to follow earnings surprises - a momentum rank over 80 identifies beats 39% of the time, while lower momentum ranks only identify 19% of them.
• Value gets you paid: six months after a positive surprise, cheap 80+ value ranked stocks were up 7%, expensive ones only 2%. There’s more return in cheaper stocks.
• Quality helps avoid misses - we found that high Quality stocks halved the miss rate of low quality stocks.

So all three ranks do work together to drive returns before and after announcements.

This year's serial beaters

Since January, 106 UK companies have carried a StockRank over 80 on the day of their first beat of the year. These are the ones that kept going, with two that did not.

I share the list as a set of case studies. The best thing to do in investing is look at the common traits and behaviours of past winners. Learn from them. And look for shares that rhyme in future.

How to apply the insights

There are a couple of options to raise the odds of finding “ahead of expectations” shares in your portfolio.

1. Firstly, the lazy approach is to apply a NAPS style process - twenty shares, the two highest-ranked in each sector, equal weight, hold for a year. You let the trading and results statements roll in. You are not picking companies specifically to beat expectations; you are just picking twenty that the market has most underestimated. I wrote about the NAPS performance in Friday's newsletter - the portfolio is up 26.5% this year, and thirteen of the twenty have beaten at least once. It works.
2. The active way is more like “The Setup”: look for "ahead of expectations" announcements, a jump of 10% or more on the day, a StockRank over 75, and six months of patience. I have to review the stats asthe performance of this approach has been more muted year to date - but it’s the principle that counts - if you can find the catalytic moments in individual shares - you can find shares like Ramsdens, CMC, Computacenter and more.

Whatever you choose - here’s the key rule in a takeaway:  Buy where market expectations are too low, and let the trading statements confirm it. A StockRank over 80 has delivered nearly four pieces of good news for every bad one, and the shares have typically been higher six months later.

Please do share your own insights on this theme in the comments below !