- Rolls Royce tops the momentum list
- Investors reward Marks & Spencer turnaround
- On The Beach sees strong forward bookings
Momentum is widely considered a powerful driver of stock returns and there are many ways to incorporate it into different trading strategies.
There is more to momentum than share price strength, and it can include earnings revisions, earnings surprises, and analysts’ recommendations.
To get a sense of the leaders we have screened Stockopedia for the shares which have outperformed the FTSE All-Share by the most over the last six months and where earnings revisions over the last month are the highest across the market.
Positive earnings revisions can be a strong driver of stock returns, as analysts increase their earnings estimates to reflect better-than-expected trading.
Perhaps unsurprisingly, topping the list is aerospace engineer Rolls Royce (RR.) which was the best-performing large-cap company in 2023 notching up gains of 207%.
Its fortunes have been turned around dramatically by new chief executive Tufan Erginbilgiç, who came on board roughly a year ago.
His harsh rhetoric on the company’s previous failings convinced the market he was serious about fixing them and at an investor day on 28 November the company outlined ambitions to quadruple profit in five years.
Evidence of whether it is executing on this plan will likely dictate its performance in 2024.
Another company reinventing itself and successfully convincing investors it is on a sustainable growth path is retail institution Marks and Spencer (MKS), which has outperformed the UK market by 40% over the last six months.
The high street stalwart also made a triumphant return to the FTSE 100 as investors rewarded the turnaround progress made under the stewardship of chief executive Stuart Machin and chairman Archie Norman.
Online travel operator On The Beach (OTB) has seen its shares gain 77% over the last six months, comfortably outperforming the UK market.
The company revealed it had its best summer ever in 2023,which saw it book a 66% increase in pre-tax profit to the end of September, and the group’s continuing cash generation allowed the reinstatement of a dividend.
Looking ahead the company said forward bookings were strong with ‘sustained significant demand for short and long lead time bookings.’
