In the field of growth investing, merging a strict technical system with attention to basic momentum can be a strong method for spotting possible leading stocks. One technique that shows this is the plan made known by trader Mark Minervini. His method depends on the "Trend Template," a group of technical rules made to find stocks in solid, confirmed upward trends. This is combined with a sharp look for basic speed—in particular, looking for firms with high and gaining profits and sales expansion. The aim is to locate investments where outstanding company results are being seen and increased by the market's movement, giving a meeting of technical force and basic engine power.
ADEIA INC (NASDAQ:ADEA) recently appeared through a scan that uses this same thinking, sorting for stocks that pass the Minervini Trend Template while also having a "High Growth Momentum" score. This two-step filter method tries to find companies that are not only moving well on graphs but are also supported by solid and speeding company measures.
Technical Fit with the Minervini Trend Template
The Minervini Trend Template is made to skip speculation and center on clear proof of force. It needs a stock's price and main moving averages to be in a precise, positive arrangement, confirming the stock is in a clear "Stage 2" climb. For an investor focused on growth, this technical soundness is key; it hints at backing from large funds and a better chance that the stock's upward path can keep going. From the given numbers, ADEA seems to pass these strict technical tests:
- Price vs. Moving Averages: The present price ($22.87) trades much higher than its rising 50-day ($19.24), 150-day ($16.44), and 200-day ($15.73) simple moving averages (SMAs). This meets the main template rule that price must be higher than all three key averages.
- Moving Average Arrangement: The 50-day SMA is higher than the 150-day SMA, which is higher than the 200-day SMA. This "ordered" setup points to a steady and firming uptrend across several time frames.
- Nearness to Highs: A present price inside 25% of the 52-week high is a sign of leadership. ADEA's price is close to the peak of its 52-week span ($10.59 - $23.52), showing it is acting as a market front-runner, not a straggler making up ground.
- Relative Strength: With a ChartMill Relative Strength (CRS) number of 95.01, ADEA is doing better than 95% of all stocks. Minervini notes that the top performers often have RS numbers above 70, ideally in the 80s or 90s, meaning they are some of the market's most forceful names.
Basic Momentum for Growth Investors
While the Trend Template deals with the "when," the "why" is often in the basics. The "High Growth Momentum" part of the scan looks for companies where the main business is speeding up. This is important because lasting price trends are often powered by gaining profits and sales. ADEA's recent financial measures show several signals of this kind of momentum:
- Profits Speed: The latest quarter showed very high year-over-year EPS expansion of about 83%. While earlier quarters varied, this large rise is the sort of positive profits surprise that can pull large fund notice and push new valuations.
- Solid Yearly Expansion: Viewing the wider scene, EPS expansion on a trailing twelve-month (TTM) basis is a firm 30%. This means the company's profit-making is on a steady upward track.
- Sales Re-speed: Maybe most importantly, last quarter's sales jumped over 53% year-over-year, a sharp speed-up from the low single-digit or falling expansion in the prior quarters. This return to high top-line expansion is a key driver for growth investors.
- Profit-Making: The company keeps good profit margins, with the last stated quarter at over 40%. While quarterly margins can change, the full-year margin of 25% shows an ability to turn sales into profits well.
Technical Soundness Summary
A look at ADEA's specific Technical Analysis Report gives a short outline. The report gives ADEA a high technical score of 9 out of 10, noting its steady positive trends in both the short and long term. It confirms the stock is a leader, trading near 52-week highs while doing better than most of its software industry friends. The report does state that after a firm recent move, the stock might gain from a time of settling, which is a usual note for stocks in forceful uptrends and fits with the Minervini focus on looking for entry points after such pauses.
Locating Like Chances
For investors keen on using this merged technical and basic momentum method, scans exist to find other possible choices in a planned way. You can look at present stocks that meet like "High Growth Momentum + Trend Template" rules by using this ready-made stock screener.
Disclaimer: This article is for information and learning only. It is not meant as investment guidance, a suggestion to buy or sell any security, or a promise of future results. Investors should do their own full study, think about their money position and risk comfort, and talk with a skilled financial guide before making any investment choices.