Investors looking to join strong growth with defined technical entries frequently use approaches like the one created by Mark Minervini. His method, called Specific Entry Point Analysis (SEPA), uses a set of technical and fundamental checks to find stocks ready for major moves. The aim is to locate firms already in strong upward trends, supported by improving business results, and to plan entries at exact, lower-risk turning points. A stock that recently appeared from a scan using Minervini's Trend Template with a High Growth Momentum filter is FIRST MAJESTIC SILVER CORP (NYSE:AG), a silver and gold producer with activities in Mexico and the United States.
A Clear Technical Trend
The Minervini Trend Template is built to screen for only the strongest stocks, making sure an investor looks only at those in a clear and strong Stage 2 uptrend. FIRST MAJESTIC SILVER CORP currently makes a strong argument for meeting these strict technical conditions.
The stock's price movement and moving average setup are typically positive:
- Price vs. Moving Averages: The present price trades notably above its rising 50-day ($22.79), 150-day ($15.54), and 200-day ($13.65) simple moving averages (SMAs). This ordered setup shows continued buying interest across all main timeframes.
- Moving Average Setup: Importantly, the shorter-term averages are above the longer-term ones, with the 50-day SMA above both the 150-day and 200-day SMAs, and the 150-day SMA above the 200-day. This order confirms a sound, strengthening uptrend.
- Nearness to Highs: A main idea of the template is to focus on strength, not low price. AG's price is within 25% of its 52-week high of $32.04, showing it is a market leader, not a weaker stock recovering.
- Relative Strength: With a ChartMill Relative Strength (CRS) score of 98.96, AG is doing better than nearly 99% of all stocks. Minervini points out that the largest winners often display better relative strength early in their advances, signaling institutional buying.
The Growth Driver: Fundamental Improvement
While the Trend Template confirms a stock is technically healthy, the SEPA method requires solid fundamental results to supply the "driver" for a continued rise. This is where the High Growth Momentum (HGM) rating is important, and AG's basic measures show notable improvement.
The firm has shown a sharp recovery and growth jump across main financial measures:
- Earnings Surge: Year-over-year earnings per share (EPS) growth is very high, with the latest quarter jumping 900% compared to the same time last year. This comes after a series of strong quarterly gains (333%, 157%, and 183% in earlier quarters). Analysts are noticing, with the average EPS estimate for the next year raised by over 138% in the last three months.
- Revenue Growth: Top-line growth is also strong, with revenue for the past twelve months up 124% year-over-year. Recent quarterly sales growth has regularly been in the high double or triple digits.
- Gaining Profitability: The growth is reaching the net income. The company's profit margin in the last reported quarter was 17.9%, a clear gain from 9.5% the quarter before, showing not just growth, but more efficient and profitable growth.
- Cash Flow Creation: Free cash flow per share has risen greatly, increasing over 755% in the past year, giving the company financial options for more investment or shareholder benefits.
This mix of very high earnings growth, strong sales growth, and gaining margins forms the fundamental "reason" that Minervini looks for, a clear cause for institutions to buy the stock actively.
Technical Condition and Entry Factors
According to ChartMill's own analysis, FIRST MAJESTIC SILVER CORP receives a high Technical Rating of 10 out of 10, showing its outstanding trend condition and market-leading performance. The report states the stock is trading in the higher part of its 52-week range and does better than 94% of its peers in the Metals & Mining industry.
However, the analysis also gives an important detail for traders using the SEPA method. The Setup Quality Rating is now a 3. This means that while the stock's long-term trend is very good, its recent price action has been unstable, missing the narrow, calm consolidation, like a Volatility Contraction Pattern (VCP), that describes a preferred, lower-risk entry point. The report summary notes that "it does not present a decent entry opportunity at the moment" and proposes waiting for a consolidation to form. This difference is important; it shows the gap between a good stock and a good entry point, a main idea in Minervini's structured approach.
For a full view of the support levels, trend study, and complete ratings, you can see the full Technical Analysis Report for AG.
Conclusion
FIRST MAJESTIC SILVER CORP offers an interesting example for the Minervini SEPA method. On one side, it shows an almost perfect match with the Trend Template's needs for a strong uptrend and has fundamental growth numbers that meet the high momentum investor's requirements. The major gains in earnings, revenue, and cash flow give a clear fundamental reason.
On the other side, the present technical entry condition, as shown by the low Setup Quality score, suggests the stock may be overbought in the near term. For a growth investor, AG tells an interesting story of fundamental change. For a precise trader following SEPA closely, it may now act as a clear example of a strong stock to monitor, waiting for the formation of a proper volatility contraction and turning point to give a more suitable risk/reward entry.
Want to find more stocks that match this mix of high-growth fundamentals and strong technical trends? You can examine the scanning method that found AG by visiting the High Growth Momentum + Trend Template screen on ChartMill.
Disclaimer: This article is for informational and educational purposes only. It is not intended as investment advice, nor does it constitute a recommendation to buy, sell, or hold any security. The analysis is based on data provided and should not be the sole basis for an investment decision. Always conduct your own due diligence and consider consulting with a qualified financial advisor before making any investment. Please read our full disclaimer here.
