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Posted July 10, 2025 at 10:15 am
In investing, it’s often not just the news that matters — it’s how investors react to it. One of the most underappreciated signals in the market is when analysts raise their earnings forecasts. Research shows that the market tends to underreact to this kind of good news, creating a window of opportunity for those paying attention.
That’s the premise behind the Earnings Revision Investor strategy developed by Wayne Thorp and implemented by Validea. The model, based on Thorp’s paper How to Profit From Revisions in Analysts’ Earnings Estimates, focuses on companies experiencing positive earnings estimate revisions for both the current and next fiscal year. It excludes any stock with negative revisions and ensures there’s sufficient analyst coverage to avoid statistical noise.
The idea is simple: when analyst sentiment turns meaningfully more optimistic, there’s often more room to run.
| Ticker | Company Name | Price | Market Cap ($B) | P/E | Price/Sales | Rel. Strength | Dividend Yield |
|---|---|---|---|---|---|---|---|
| URBN | Urban Outfitters | $73.57 | $6.6 | 15.4 | 1.2 | 88 | 0.0% |
| DELL | Dell Technologies | $125.22 | $85.0 | 19.5 | 0.9 | 41 | 1.5% |
| CLS | Celestica Inc | $159.26 | $18.5 | 44.5 | 1.8 | 94 | 0.0% |
| MPWR | Monolithic Power Systems | $758.64 | $36.3 | 20.1 | 15.2 | 43 | 0.7% |
| NTES | NetEase Inc (ADR) | $132.85 | $84.1 | 18.9 | 5.6 | 80 | 0.7% |
| AMP | Ameriprise Financial | $543.30 | $51.7 | 18.5 | 2.9 | 73 | 1.1% |
| WSM | Williams-Sonoma | $173.19 | $21.3 | 20.1 | 2.7 | 72 | 1.3% |
| KNSL | Kinsale Capital Group | $476.16 | $11.1 | 27.4 | 6.9 | 72 | 0.1% |
| GFI | Gold Fields Ltd (ADR) | $24.20 | $21.4 | 17.4 | 4.1 | 86 | 0.7% |
| PRI | Primerica Inc | $277.24 | $9.1 | 12.6 | 2.9 | 67 | 1.3% |
When analysts revise earnings estimates upward, it typically reflects improving fundamentals — stronger demand, better margins, or operational improvements. But the market doesn’t always fully price that in right away. This creates a lag effect that Thorp’s strategy aims to exploit. Validea’s implementation of the model is strict:
This disciplined approach helps investors focus on real, quantifiable change—not just headlines.
Earnings revisions are one of the clearest signals that a company’s future may be brighter than expected. And when paired with a systematic model like Wayne Thorp’s, they become a powerful way to uncover stocks with improving outlooks before the broader market catches on. These companies—across retail, tech, insurance, and gold — are riding a wave of rising expectations. Investors looking for momentum rooted in fundamentals may want to take a closer look.
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Originally Posted on July 7, 2025 – Riding the Earnings Wave: 10 Stocks Backed by Upward Revisions
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Validea Capital Management and is being posted with its permission. The views expressed in this material are solely those of the author and/or Validea Capital Management and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
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