I think there are basically 2 prevailing strategies in the market.

1) Earnings revisions

Only two questions matter near-term: Is the story getting better or worse, and are numbers going up or down? That's it.

For momentum names, in either direction, that's all that matters -> is the story continuing to improve w/ beat and raises, or is the story continuing to erode with misses / guidance reductions.

There is more complexity at extremes (ie second derivatives) that also works -> the story has stopped getting worse and numbers are no longer going down so upside optionality, or narrative no longer improving and downside risk to numbers so downside optionality.

Earnings revisions work because they are reflexive. The company is doing well, estimates are moving higher and the stock is rising. More investors do work on the name and the due diligence will be positively biased as they generally ask more favorable questions to understand the strengths of the company. This leads to more buying and the increased stock price reinforces the bullish narrative. Hopefully, management is smart enough to set forward guidance at beatable levels and the step-ups continue.

Same is true for reflexivity on the downside. A company is struggling and missing its own guidance and expectations. The stock moves lower as obviously more people sell than buy. Investors do more work but are naturally more focused on the reasons for corporate underperformance and corresponding risks. Further stock price declines fuel the negative narrative which feeds on itself. Companies often don't take their medicine as far as fully disclosing bad news and the negative revisions continue.

So again, the playbook for this is simply 1) is the story getting better or worse?, and 2) are numbers going up or down?

2) Valuation

From time to time, stocks get too cheap or expensive relative to fundamentals such that the disconnect is very interesting (let's say can make at least 50% to get back to conservative valuation target in either direction within 12-18 months).

Very often, large disconnects occur when earnings revisions are unclear to everyone (stock is really cheap but no one has any clue when numbers stabilize, stock is really expensive but everyone thinks company will continue beating / raising).

However, the insight here is that valuation is interesting in and of itself for the right kinds of companies (solid business, transitory issues, acquisition candidates, etc.). And that no one has visibility into near-term numbers is already in the stock and why the valuation is so compelling.

This opportunity also always arises in tough macro periods where everyone is frozen bc who can predict how the great financial crisis or covid pandemic plays out - so that uncertainty is shared by everyone and more than represented in stock valuations. And that is why the opportunity exists - because everyone is worried about the same imponderable thing and it's already in the stock price. The only advantage you need here is a deep understanding of and conviction in the business, and freedom / willingness to buy it for the long-term (and the returns never take as along as you think).