Devoted to understanding the basics and fundamentals of investing

The key determinant of stock price is the consensus opinion of the future growth in earnings.  The market wants to know if it will grow faster than the index and faster than its peer group.  It also wants to know how long the above trend growth will continue. 

There is some research that focuses on the role of analysts' earnings forecasts versus earnings surprises in identifying stocks that will out perform.  There are at least two companies that I know of that have made a business out of this characteristic of the market.  I will do a post on each of them to make you aware of the opportunities they present.

The first is Starmine.  Starmine tracks the forecast versus actual for every analyst for every publicly traded company.  It then ranks the result from one to five stars.  Their research shows that following the recommendations of the best analysts will out perform the index.  I will give more details in the Starmine post.

The second is Zacks.  Len Zacks did research that indicated that "Earnings estimate revisions are the most powerful force impacting stock prices." (Quoted from The Zacks Rank).  He developed a ranking system to exploit that fact. 

Stay tuned tomorrow, same bat time, same bat channel.