For investors looking to join solid fundamental growth with well-timed technical entry points, a method using several filters can be very useful. One way is to look for stocks that show three main traits: a top score on the ChartMill High Growth Momentum (HGM) Rating, which finds firms with strong earnings and sales growth; a solid ChartMill Technical Rating, showing the stock is in a good uptrend; and a high ChartMill Setup Rating, finding times of steady consolidation that frequently come before a price move upward. This method tries to find leading companies with solid business momentum just as they finish a pause in their price rise, possibly giving a good entry point when considering risk and reward.
AGNICO EAGLE MINES LTD (NYSE:AEM) appears from this filter, presenting a strong case for high growth momentum investors who also value technical discipline.
Fundamental Growth Momentum
Agnico Eagle's fundamental picture is noted for outstanding growth measures, which is the base of the momentum method. The firm's HGM Rating of 9 out of 10 shows force across several areas growth investors focus on.
- Strong Earnings Growth: The company's trailing twelve-month (TTM) EPS has increased almost 97% year-over-year. More notably, recent quarterly momentum is stronger, with the last quarter showing EPS growth of over 114% compared to the same quarter a year before.
- Solid and Increasing Sales: Revenue growth is also notable, with TTM sales up about 44%. The most recent quarter saw sales rise over 60% year-over-year, showing a quickening in top-line growth.
- Growing Profitability: A main part of the HGM rating is looking at margin growth. Agnico Eagle's profit margin in the last reported quarter was about 42.7%, a large growth from 34.5% in the prior quarter and 22.9% in the last fiscal year. This shows not only growth, but higher-quality, more profitable growth.
- Positive Surprises and Revisions: The company has exceeded EPS estimates in three of the last four quarters by an average of over 10%, and has beaten revenue estimates in all of the last four quarters. Also, analysts have raised their estimates notably, with the average next-year EPS estimate going up almost 30% over the last three months.
These items together show a picture of a company seeing strong fundamental momentum, supporting its high HGM score. For momentum investors, this mix of acceleration, surprise, and upward revision is exactly what shows a stock may have more room to rise.
Technical Strength and Setup Quality
While good fundamentals give the "why," technical analysis gives the "when." Agnico Eagle's technical picture is very good, as shown in its full technical report.
- Excellent Technical Health: The stock gets a top ChartMill Technical Rating of 10. This score notes that both its long-term and short-term trends are good. It is trading above all main moving averages (20, 50, 100, and 200-day), which are all rising, a clear sign of a good uptrend. Its relative strength is better than 87% of all stocks in the market.
- Good Consolidation: Maybe more important for entry timing is the stock's Setup Rating of 8. This shows the stock has been consolidating its recent gains in a fairly tight range over the past month, trading between about $175.56 and $224.35. Such times of lower volatility and sideways movement after a strong rise often form a base for the next breakout.
- Clear Risk Parameters: The technical analysis finds a defined support area between $214.16 and $215.56, made by a mix of moving averages and trendlines. This gives a logical area for a stop-loss order, allowing for careful risk management if the expected breakout does not happen. The report also notes a recent "Pocket Pivot" signal, a volume-based sign suggesting buying.
The mix of a top technical rating and a high setup rating is forceful. It confirms the stock is a market leader in a continuing uptrend that is now pausing, possibly giving a lower-risk entry point compared to buying it during a fast rally.
A Joining Opportunity
Agnico Eagle Mines shows a joining of the items looked for by the filtering method. Its high HGM Rating confirms the fundamental earnings and sales momentum that pushes continued price growth. Its top Technical Rating confirms that this fundamental force is being seen by the market in the form of a strong price trend. Finally, its high Setup Rating suggests this trend may be ready to continue after a short time of consolidation, giving a tactical entry sign.
This multi-rating method helps filter for stocks that are not only growing quickly but are also in a technically good position for new investment.
Interested in finding other stocks that meet these items of high growth momentum and good technical setups? You can run the filter yourself using this High Growth Momentum Breakout Setups Screen.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. The analysis is based on data provided and should not be the sole basis for an investment decision. All investing involves risk, including the possible loss of principal. Always conduct your own due diligence and consider consulting with a qualified financial advisor before making any investment decisions.