For investors looking to combine solid earnings momentum with positive technical patterns, a multi-layered screening method can be very useful. By selecting for stocks that show strong basic growth foundations, are in a good technical upward trend, and are at the same time forming into a possible breakout pattern, traders try to match fundamental catalysts with good entry points. This method depends on finding companies where speeding up business performance is happening at the same time as a helpful price formation, indicating the chance for a notable price move.
ALAMOS GOLD INC-CLASS A (NYSE:AGI) comes from such a screen, making a case for high-growth momentum investors who also value technical discipline.
High Growth Momentum Profile
The center of the momentum case for Alamos Gold is in its recent and forecasted earnings power. The company's ChartMill High Growth Momentum Rating of 6 shows good performance across several important growth measures that are key for momentum methods. These methods concentrate on companies showing speeding up business trends, which can lead to continued price gains.
- Notable Earnings Growth: The company's newest quarterly earnings per share (EPS) jumped 94.7% compared to the same quarter last year. This comes after a strong 108.3% growth rate in the quarter before. Looking forward, analyst estimates point to a continuation of this pattern, with next quarter's EPS expected to grow 119.5% year-over-year.
- Good Sales Increase: Revenue growth has been solid, with the last quarter showing a 28.1% year-over-year rise. This is backed by a trailing twelve-month (TTM) revenue growth of 31.3%, showing a maintained increase of the company's top line.
- Profit Margin Increase: A key sign of operational efficiency and pricing strength, Alamos Gold's profit margin in the last reported quarter was 59.8%. This shows a notable increase from 36.4% in the previous quarter and 4.6% two quarters ago, suggesting the company is turning more of its revenue into profit.
- Positive Analyst Changes: Supporting the forward-looking momentum, analysts have changed their EPS estimates for the next year higher by 1.7% over the last three months. While small, this upward change pattern fits with the company's good recent results.
These factors together create an image of a company in a strong earnings rise, which is the basic fuel looked for by high-growth momentum investors.
Technical Strength and Setup Quality
While good foundations give the "why," technical analysis helps find the "when." According to the detailed ChartMill Technical Report, AGI gets a nearly perfect Technical Rating of 9 out of 10. This score measures the stock's overall technical condition, and a rating this high points to a good and steady upward trend.
- Long-Term Upward Trend in Place: The report confirms the long-term trend for AGI is positive. The stock has done much better than the wider market, placing in the top 7% of all stocks over the past year with a gain of more than 81%.
- Formation Within an Upward Trend: Importantly for timing, the stock also gets a Setup Rating of 7. This shows that after its good run, the price has moved into a formation phase, trading in a set range over the past month. Such times of pause after a rise often come before the next move higher.
- Clear Support and Resistance: The technical analysis finds a clear support area between $36.82 and $37.28, made by a coming together of trendlines. This gives a logical area for a stop-loss order, setting the risk of a possible trade. The report notes there is "very little resistance above the current price," which could allow for a clear path upward if a breakout happens.
The mix of a high Technical Rating (good trend) and a solid Setup Rating (helpful pause) is exactly what the screening method looks for. It suggests the stock is not overstretched but is instead building energy inside its set upward trend, possibly preparing for a new breakout.
A Coming Together Opportunity
For investors using a high-growth momentum method, Alamos Gold shows a coming together of strong factors. The company is showing the kind of fast quarterly earnings growth and margin increase that can get the market's notice and lead to reratings. At the same time, the stock's technical position shows it is in a leading long-term upward trend and is currently pausing its gains in a steady way, offering a clearer risk-defined setup than if it were very extended.
This alignment is the goal of the combined screen: to find companies where fundamental momentum is backed by, and may be ready to show itself through, a helpful technical pattern.
Interested in finding other stocks that meet these conditions of high growth momentum and technical breakout formations? You can run the screen yourself using this High Growth Momentum Breakout Setups Screen.
Disclaimer: This article is for information only and does not make up investment advice, a recommendation, or an offer or request to buy or sell any securities. The analysis shown is based on data given and should not be the only base for any investment choice. Investing includes risk, including the possible loss of principal. Always do your own research and think about talking with a qualified financial advisor before making any investment choices.
