Investors looking to join detailed technical study with basic growth measures frequently use methods like the Mark Minervini strategy. This method, outlined in Minervini's SEPA (Specific Entry Point Analysis) system, aims to find stocks that are both in strong, clear uptrends and supported by improving business foundations. The aim is to find market leaders early in their big price increases by using a fixed, rules-based system. An important instrument in this strategy is the Minervini Trend Template, a group of technical checks made to confirm a stock is in a verified Stage 2 climb. When this technical condition is combined with a firm showing strong growth speed, marked by solid and improving earnings and sales, it forms an attractive picture for investors focused on growth.
ADTRAN HOLDINGS INC (NASDAQ:ADTN) offers a present example for this joined method. The firm, a supplier of network access products, seems to be matching both the technical rules of the Trend Template and the fundamental push desired by growth investors.
Fitting the Minervini Trend Template
The Trend Template is basic to Minervini's strategy since it checks for stocks where the direction is clearly upward, reducing the chance of buying into a fading or sideways trend. ADTN's chart presently meets the main technical conditions:
- Price Above Important Moving Averages: The stock's latest price of $12.97 trades significantly above its increasing 50-day ($10.18), 150-day ($9.35), and 200-day ($9.24) simple moving averages (SMAs). This order confirms the stock is in both a near-term and longer-term uptrend.
- Moving Average Order: The 50-day SMA is above both the 150-day and 200-day SMAs, and the 150-day SMA is above the 200-day SMA. This positive order of averages shows continued and increasing buying interest across periods, a sign of a sound Stage 2 climb.
- Nearness to Highs: At $12.97, ADTN is trading within 1% of its 52-week high of $13.05 and is about 87% above its 52-week low of $6.93. Minervini notes that real market leaders reach new highs, and buying near highs is better than trying to find a "low-priced" stock at a bottom.
- Better Relative Strength: With a ChartMill Relative Strength (CRS) score of 91.78, ADTN is doing better than almost 92% of all stocks. High relative strength is a vital check in the strategy, as it finds securities that are wanted and driving the market up, not just following a trend.
Meeting High Growth Speed Conditions
While the Trend Template deals with the "when" to buy, the "what" to buy is decided by fundamental growth. The High Growth Momentum (HGM) rating searches for firms with strong and often improving financial results, which can be the reason for continued price gains. ADTN's recent foundations indicate it matches this growth picture:
- Strong Earnings Growth: The company's trailing twelve-month (TTM) EPS has increased by over 177% year-over-year. Even more attractive is the recent quickening in quarterly results, with the last quarter showing EPS growth of 92.2% compared to the same quarter a year before. This type of powerful earnings change is precisely what growth investors and methods like SEPA aim to find early.
- Positive Estimate Changes: Analyst view is getting better, with the average EPS guess for the next fiscal year moved up by 7.5% over the last three months. Upward changes often come before more institutional buying and price speed.
- Sales Growth: Backing the earnings increase, TTM revenue has grown by 17.5%. The most recent quarter had sales grow by 20.1% year-over-year, showing present business speed.
- Steady Results: The company has exceeded EPS guesses in two of the last four quarters by an average of 42.2%, showing a habit of beating expectations.
Technical Condition and Setup Points
A look at ADTN's technical report confirms its strength while noting a point for entry. The report gives the stock a high technical score of 9 out of 10, showing its strong trend, better relative strength, and recent rise to a new 52-week high. The long-term and short-term trends are both scored as good.
However, the report notes the setup quality score is now a 3. This shows that while the stock is technically very sound, its recent fast rise (up over 30% in the past month) has made the price movement unsteady. For a strict Minervini-style entry, this indicates watching for a forming pause or volatility reduction pattern (VCP) to appear, which would give a better-probability, lower-risk entry point with a defined stop-loss level. The complete technical study, including found support areas, can be examined in detail here.
Conclusion and Additional Study
ADTRAN HOLDINGS INC shows the kind of security that filters like the 'High Growth Momentum + Trend Template' try to find: a firm with improving fundamental results trading inside a technically strong and verified uptrend. It fits the strict list of the Minervini Trend Template and shows the earnings speed growth investors look for. The present technical position indicates it is a stock to observe carefully, with the best method being to watch for a possible pause to give a more favorable risk/reward entry.
For investors wanting to find other choices that fit this particular mix of technical and fundamental strength, the filter that found ADTN is ready to use. You can find more possible high-growth speed stocks fitting the Trend Template conditions here.
Disclaimer: This article is for information and learning only. It is not a suggestion to buy or sell any security. All investing and trading includes risk, and readers should do their own study and talk with a qualified financial advisor before making any investment choices. The study is based on data thought to be correct, but its accuracy cannot be assured.