The combination of Mark Minervini's trend-following method with high growth momentum screening forms a structured process for finding stocks with both solid technical bases and sound fundamental growth features. Minervini's plan centers on stocks showing strong uptrends through his Trend Template rules, while high growth momentum investing aims at companies with quickening earnings, growing profit margins, and good revenue growth. This two-part method tries to find stocks that not only display technical health but also have the fundamental reasons to continue their upward movement.
Technical Health Through Minervini's Trend Template
ANALOG DEVICES INC (NASDAQ:ADI) shows good agreement with Minervini's Trend Template rules, which is important for finding stocks in clear uptrends. The template's moving average rules make sure a stock keeps both short-term and long-term positive movement, a main idea in Minervini's method that helps traders stay away from stocks in sideways or falling periods.
The stock currently trades at $257.92, placing it well above all key moving averages:
- 50-day SMA: $239.06 (going up)
- 150-day SMA: $233.00 (going up)
- 200-day SMA: $226.14 (going up)
This arrangement meets Minervini's rule for price to trade above all three moving averages while keeping averages that slope upward. The 50-day SMA trading above both the 150-day and 200-day SMAs gives more proof of building positive movement, another necessary part of the Trend Template that points to institutional buying and a firming trend.
Nearness to Highs and Relative Performance
Minervini points out that real market leaders trade close to their 52-week highs instead of recovering from lows. ADI currently trades just 1.1% below its 52-week high of $260.74 while holding a large 63% above its 52-week low of $158.65. This placement satisfies the Trend Template's rule for stocks to be within 25% of their 52-week highs while staying at least 30% above their 52-week lows, rules made to find stocks with good positive movement rather than those in rebound stages.
The stock's relative strength score of 75.52 shows it does better than about three-quarters of the market. While Minervini usually looks for scores above 80 for top choices, ADI's score still shows acceptable relative performance, especially with its recent move toward new highs during a time of general market health.
High Growth Momentum Fundamentals
Beyond technical rules, ADI shows interesting growth features that match high growth momentum investing ideas. The company's recent earnings results show clear quickening, a main factor Minervini notes in his fundamental review for finding companies with better business conditions.
Recent quarterly results of note include:
- Current quarter EPS growth: 35.3% year-over-year
- Previous quarter EPS growth: 29.7% year-over-year
- Two quarters prior EPS growth: 32.1% year-over-year
- Revenue growth quickening to 25.9% in the most recent quarter
This earnings positive movement is especially noteworthy given the company's steady record of going past analyst predictions, having beaten EPS estimates in all of the last four quarters by an average of 4.2%. Such good surprises often draw institutional notice, an event Minervini finds important for continued price gains.
Profit Margin Growth and Cash Flow Increase
The company's better operational effectiveness is clear in its growing profit margins, which went up to 25.6% in the most recent quarter from 18.0% in the quarter before. This margin growth, paired with sound free cash flow increase of 37% year-over-year to $8.70 per share, gives fundamental support for the stock's technical health. Minervini often notes that the largest stock market winners usually show better fundamentals together with technical breakouts.
Technical Review Summary
According to ChartMill's technical review report, ADI gets a 6 out of 10 on technical score, showing acceptable but not outstanding technical condition. The report notes the stock's short-term trend has become positive while the long-term trend stays neutral, meaning the stock is getting more notice from traders and investors. Recent volume rises during the upward move give extra proof of institutional interest.
The technical review finds several support levels between $225 and $244, with resistance seen close to the current 52-week high around $258. The full technical details, including complete support and resistance review, are available in the complete technical report.
Investment Points
While ADI fits many Minervini Trend Template rules and shows good growth positive movement, investors should note that the stock's recent fast rise may call for waiting for better entry points. The technical report suggests waiting for a pause or pullback before starting new positions, a careful method given the stock's nearness to resistance and higher price swings.
The mix of technical health across multiple timeframes, quickening earnings growth, growing profit margins, and steady estimate beats places ADI as a stock worth watching for both trend-following and growth-focused plans.
Find More Options
For investors looking for other choices that mix Minervini's trend rules with high growth momentum features, the High Growth Momentum + Trend Template screen gives regularly refreshed results that meet these strict rules.
Disclaimer: This review is for information and learning only and does not make up investment advice. All investments carry risk, and past results do not ensure future results. Readers should do their own research and talk with a qualified financial advisor before making investment choices.
