StockRanks: pick better stocks with a proven, data-driven edge

Since the launch of Stockopedia's StockRanks in April 2013, portfolios of high-ranked stocks have, on average, outperformed portfolios of low-ranked stocks across all regional markets. Portfolios of 90+ ranked shares in the UK have delivered significantly higher win rates and long-term annualised returns compared to the market average.

It should be noted that individual shares have hugely varying outcomes regardless of their ranking. There is nothing stopping a low ranking share from outperforming, or a high ranking share from plummeting on a profit warning. Diversification is key to capturing the high StockRank returns.

While no system eliminates risk and performance can vary across market cycles, using the StockRanks can help tilt the probabilities in your favour, helping investors focus on stocks with characteristics that have historically led to higher returns.

The StockRanks have been inspired by hundreds of academic research papers which show that stocks with the characteristics of higher Quality, Value, and Momentum tend to outperform over time. The ideas can be validated independently using the Fama & French data libraries.

StockRanks are built on Quality, Value, and Momentum because these are three of the most powerful and enduring drivers of stock returns, supported by decades of academic research and real-world results. Each of the three “factors” captures a different dimension of the characteristics that make up proven investment styles:

• Quality: Identifies financially strong, profitable companies and helps avoid weak or speculative firms. (Favoured by Warren Buffett):
• Value: Finds stocks trading at attractive prices relative to their fundamentals, increasing the odds of strong future returns. (Favoured by Benjamin Graham)
• Momentum: Exploits the persistence of trends, allowing investors to benefit from improving company prospects and rising share prices. (Favoured by Jesse Livermore)

There are other factors that can be used in combination with the QVM above to improve results, for which we provide filters (for example small-caps and low-volatility shares).

Why combine them?

Individually, each factor has been shown to outperform over time - but they work even better together.

• Higher Returns: Multi-factor strategies combining Quality, Value, and Momentum have historically produced stronger long-term performance than relying on a single factor.
• Lower Risk: Value and Momentum, in particular, are often negatively correlated - when one underperforms, the other may perform well - which smooths returns.
• All-Weather Resilience: Together, they provide a more reliable and diversified framework that works across sectors, regions, and different market conditions.

StockRanks integrate these three timeless, evidence-backed factors into a single score, giving investors a robust foundation for making better long-term decisions.

StockRanks are built on institutional-grade financial data from some of the world's most trusted providers, ensuring a high level of accuracy, consistency, and global coverage.

Key sources include:

• LSEG (formerly Refinitiv): Provides standardised financial statements, ownership data, and historical metrics for thousands of companies worldwide.
• IBES (Institutional Brokers Estimate System): Aggregates analyst forecasts and recommendations from over 900 brokers across 480 global markets.
• S&P Market Intelligence: Supplies corporate actions, dividends, and market indices.
• Major stock exchanges: Share prices and trading histories come directly from exchanges like the London Stock Exchange, Nasdaq, and Euronext.

Our data sources may change if and when we identify higher quality vendors for specific data sets.

To maintain quality, Stockopedia applies thousands of automated checks and manual screenings to identify anomalies, ensure consistency, and flag potential errors. Data is synchronised with LSEG daily, then processed overnight to update the Quality, Value, and Momentum scores, usually within 24 hours of company results.

The StockRanks are calculated through a rigorous, automated, multi-step process that turns raw data into clear, actionable scores:

1. Data Sourcing (The Input): We start by sourcing raw, institutional-grade data from trusted third-party providers across North America, Europe, and Asia.
2. Continuous Processing (The Engine): After the markets close, this data is continuously fetched, organised, and meticulously cleaned in our financial cloud (AWS). This robust system runs around the clock.
3. Core Calculation (The Metrics): We then execute a lengthy computational process to generate over two thousand accurate financial statistics for every stock in our database. This includes basic measures of Value, Momentum, and Quality (profitability) before calculating higher-level algorithms for financial health, safety, and risk.
4. The Ranking (The Output): Finally, we run our proprietary ranking and classification process. We sort every stock and assign percentile ranks for each key metric, which are then combined using our well-tested formulas to generate the core Quality, Value, and Momentum Ranks. These three scores are then used to calculate the powerful composite scores, like the QVM StockRank.

StockRanks are updated daily, Tuesday through Saturday mornings, using data computed overnight after the previous day's market close. This ensures your investment decisions are always based on the freshest possible data.

Each StockRank is made up of three components - Quality, Value, and Momentum - and they update at different speeds depending on the data they rely on. The Quality Rank is the slowest-moving, changing the most when a company releases annual, interim, or quarterly financial results, as it is based purely on fundamental financial statements. The Value Rank updates daily, since it relies on price-driven valuation ratios like the Price/Earnings ratio, which change whenever the stock price moves. The Momentum Rank also updates daily, reflecting a stock's recent price performance relative to the market and shifts in analyst sentiment.

Even if a stock's price hasn't moved and there's no new news, its rank can still change because StockRanks are a relative measure - each stock is rated against all others in the market, and as other companies' data updates, the rankings shift.

It's also common for the Value and Momentum Ranks to move in opposite directions: a rising share price may boost Momentum but lower Value, since the stock becomes more expensive relative to its fundamentals.

This daily re-ranking ensures that your comparisons are always up-to-date, helping you make informed, systematic investment decisions.

Yes. StockRanks have proven effective across regions, sectors, and company sizes, though performance naturally varies.

• Regions: High-ranked stocks have delivered strong results across the world in the UK, Europe, India, Australia, Canada, and more recently the US. In the US, while mega-cap technology stocks dominated the market-cap-weighted S&P 500 for many years, portfolios of high-ranked stocks have outperformed since the 2020 pandemic crash.
• Sectors: StockRanks are effective across all sectors. Some industries, such as Technology, may naturally score lower on Value due to higher relative prices, while sectors like Industrials tend to rank higher. Nevertheless, high-ranked stocks have consistently outperformed across sectors, making cross-sector diversification a key way to capture more stable returns.
• Company Sizes: High-ranked stocks outperform across large-cap, mid-cap, small-cap, and even micro-cap stocks, demonstrating the versatility of StockRanks across market capitalisations. Performance tests exclude micro-cap stocks under £10m to avoid skew from anomalous price data.

StockRanks provide a disciplined, repeatable framework for building and managing portfolios. Investors use them in two main ways: discretionary stock picking and systematic strategies.

For stock picking, investors focus on high StockRanks (typically 80+ or 90+) to find companies with a strong “QVM tailwind” (Quality, Value, Momentum). They can refine this list using filters such as sector, dividend yield, or market capitalisation, then conduct their own research before making investment decisions. Many follow the 90/70 guideline, buying stocks above 90 and reviewing or selling those below 70, combining data-driven filtering with personal judgment.

For systematic strategies, investors use StockRanks as the foundation of a rules-based portfolio, typically holding 15–25 top-ranked stocks and rebalancing semi-annually or annually. Frameworks like the No Admin Portfolio System (NAPS) show how simple, repeatable rules can generate strong performance, while the 90/70 guideline helps manage exits and remove emotional bias.

StockRanks also support portfolio management and risk, helping investors identify underperforming stocks, maintain diversification across StockRank styles and sectors, and combine rankings with tools like technical analysis or pre-programmed “Guru Screens.” Maintaining a long-term perspective (6–12 months) helps navigate short-term volatility.

High StockRanks are not investment advice or a guaranteed signal to buy. They are statistical measures showing that a stock ranks highly on Quality, Value, and Momentum, based on historical patterns of outperformance.

High ranks simply stack the odds in your favour, guiding research rather than providing a direct buy signal. Investors should use them as a screening tool, combining rankings with fundamental analysis, current news, valuation checks, and personal risk tolerance.

Even highly ranked stocks can underperform, and the rankings work best over 6–18 months holding periods. Apply them systematically across diversified portfolios and use proper risk management. StockRanks are powerful for identifying candidates, but your own due diligence and professional advice remain essential.

StockRanks improve your odds, but they don't remove risk. The most common mistakes come from misunderstanding how to use them effectively.

A frequent error is over-concentration - putting too much weight on a single stock or sector. The rankings work best when spread across a diversified portfolio of 15 - 25 stocks, with each position limited to roughly 3 - 7% of your capital.

Another is false precision. Small differences in rank aren't significant; a stock ranked 99 isn't meaningfully better than one ranked 90. The ranks are designed to guide you toward higher-probability opportunities, not deliver exact predictions.

Behavioural mistakes are also common—selling winners too early, holding on to losers, or chasing the latest market fad. Following consistent, evidence-based rules (like the 90/70 guideline) helps counter these impulses.

Finally, some investors forget that the StockRanks are factor-based, and factors don't perform equally in all markets. Quality, Value, and Momentum each shine at different times, so short-term underperformance in one area is normal within a long-term strategy.

In short, use StockRanks as a research compass, not a crystal ball - combine them with discipline, diversification, and sound risk management to give yourself the best chance of success.