In growth investing, joining a solid technical system with strict fundamental review can be a strong method for spotting possible market leaders. One method is supported by trader Mark Minervini, whose SEPA (Specific Entry Point Analysis) plan uses filters for stocks showing clear uptrends, improving fundamentals, and exact entry points. This method usually starts with his Trend Template, a group of technical rules made to find stocks in a clear Stage 2 uptrend, and is improved by looking for firms with strong growth momentum, shown by good earnings and sales improvement.
A stock that now comes from such a strict screening is ADVANCED ENERGY INDUSTRIES (NASDAQ:AEIS). The firm, which supplies precision power conversion products for areas like semiconductor equipment and industrial technology, seems to fit the main ideas of this joined plan.
Technical Fit with the Minervini Trend Template
The base of Minervini's method is a stock's price movement, making sure it is in a good, long-term uptrend before any fundamental review is done. AEIS now fits the important technical rules of the Trend Template, which works as a filter for more study.
- Trading Above Key Moving Averages: The stock's price is above its rising 50-day, 150-day, and 200-day simple moving averages (SMAs). This order (50-day > 150-day > 200-day) is a clear sign of a solid, set uptrend and shows buyers are in charge across different time periods.
- Near Highs: A main Minervini idea is to focus on strength, not weakness. AEIS is trading within 25% of its 52-week high, showing it is a market leader, not a follower. At the same time, the current price is over 30% above its 52-week low, confirming a clear recovery and uptrend are already happening.
- Better Relative Strength: Maybe most important is the stock's ChartMill Relative Strength (CRS) score of 95.1. This means AEIS has done better than about 95% of all stocks in the past year. Minervini states that the largest winners often show high relative strength early, pointing to institutional buying and leadership.
These technical points together suggest AEIS is in a clear Stage 2 uptrend, the only stage in which Minervini aims to invest. It shows a stock that has moved out of a base, gained steady buying interest, and is following its rising trend.
Fundamental Support for Strong Growth Momentum
While the Trend Template makes sure the stock is technically good, the "high growth momentum" part of the screen looks into the fundamental driver behind the price movement. For a growth investor, improving financial results is essential. AEIS shows several strong numbers that fit this view.
- High Earnings Growth: The latest quarterly earnings per share (EPS) grew by 77.55% compared to the same quarter last year. This comes after a pattern of good improvement, with the previous quarter showing 76.47% growth and the quarter before that at 112.07%. This series of triple-digit and high-double-digit growth is what momentum investors look for, a real, getting better fundamental reason for the price trend.
- Steady Earnings Surprises: The company has exceeded analyst EPS estimates in each of the last four quarters, with an average surprise of 14.68%. Steady better results builds trust with investors and often leads to positive changes for future estimates, another key number Minervini watches.
- Positive Estimate Changes: Analysts have been increasing their forecasts, with the average estimate for next year's EPS moved up by over 9% in the last three months. Upward changes are a clear sign of growing belief in the company's future profit and often come before more price gains.
- Good Sales Growth: Top-line growth is also positive, with recent quarterly revenue rising by 23.81% year-over-year. Strong sales growth confirms that earnings growth is driven by demand and market share gains, not just cost reduction.
This joining of technical strength and fundamental improvement creates a positive cycle: good earnings draw institutional buyers, which pushes the price higher and improves the technical view, which can then draw more momentum-focused investment.
Technical Condition Summary
A look at the detailed ChartMill Technical Analysis Report for AEIS gives the stock a full technical score of 10 out of 10. The report states both short-term and long-term trends are positive, and the stock is doing better than most of its peers in the Electronic Equipment, Instruments & Components industry. While the report rightly points out that the recent changing price movement has led to a lower setup quality score, showing it may be stretched in the very short term and not at a perfect low-risk entry point, the basic technical condition is scored as very good. For an investor following a trend-following growth plan, this confirms the stock's place in a strong uptrend.
Locating Comparable Chances
For investors looking to use this same strict mix of trend-following and growth momentum screening, the process that found AEIS can be repeated. The "High Growth Momentum + Trend Template" screen looks for stocks that first pass Minervini's technical checklist and then show the fundamental improvement needed for continued momentum.
You can review current stocks that fit these joined rules by going to the High Growth Momentum + Trend Template screen on ChartMill.
Disclaimer: This article is for information and learning only. It is not a suggestion to buy or sell any security. The study is based on given data and shows a specific investment method. All investing has risk, including the possible loss of principal. You should do your own research and think about talking with a qualified financial advisor before making any investment choices. Please read our full disclaimer here.
