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If there’s one phrase that really jumps out at me when I see a trading statement, it’s when a company is described as performing ‘ahead of expectations’.
The exact wording can vary, of course, but so long as it’s along these lines, I’m interested.
If there’s one phrase that’s even better, it’s ‘substantially ahead of expectations’.
If you’re already holding a share that is performing ‘ahead of expectations’ then you can probably push it into a longer-term hold category. Now is the time to sit back and do nothing (perhaps just put the kettle on).
Otherwise you can often buy in knowing that results are likely to be decent for a while. Chances are good that the next few statements will show the share price going up. At the very least you’ll be invested in a share that isn’t likely to fall substantially.
The best way to find these ‘ahead of expectations’-type companies is to run through daily market statements when they appear, just after 7am on ADVFN. You have an hour to find a nice ‘ahead of’ before the market opens at 8am.
An example is the online bathroom retailer, Victorian Plumbing (LSE:VIC). I just happened to notice it when news statements were coming out on 6 October 2022.
There I was, lying in bed with no plans to do much that day, when I stumbled across a very strong statement. There were lots of phrases I like to see, including ‘ahead of market consensus.’
And, what’s that? £43m in net cash! Big tick! Revenue up 78% compared to pre-Covid! Another tick: all online, no massive chain of expensive shops to pay for…
I leapt out of bed pronto, only 15 mins till market open. (Despite this, tea and toast comes before money at all times so I did lose a vital ten minutes.)
I checked all the fundamentals. Shares had been over 300p just a few months previously. Now they were at 39p on a tiny P/E of just 8. With a mountain of cash and a very decent results statement likely due soon, it felt like a no-brainer.
I went in after I’d finished my Yorkshire Gold and bought a couple of times at 39p. This one was probably one of the easiest buying decisions I’ve ever had to make.
Shares gradually climbed to 80p.
