For investors looking to join solid fundamental growth with well-timed technical entry points, a multi-layered screening method can be very useful. By selecting for stocks with a firm High Growth Momentum (HGM) Rating, a high Technical Analysis (TA) Rating, and a notable Setup Quality Rating, the method tries to find companies showing strong earnings momentum that are also in clear uptrends and making favorable price patterns. This combination of elements tries to address both the "what to buy" and "when to buy" questions that are key to momentum-based investing. One stock that recently appeared from this screen is Alignment Healthcare Inc (NASDAQ:ALHC).
A Profile in High Growth Momentum
Alignment Healthcare runs a consumer-focused platform providing Medicare Advantage and other health plans, mainly for seniors and people with chronic conditions. The company's own technology, AVA, works to coordinate care and better the member experience. From a growth momentum view, the company's recent financial numbers tell a notable story, giving it a firm HGM Rating of 6. This score brings together several important growth and momentum indicators that are vital for the method, as they signal speeding up business performance and good analyst views.
- Strong Revenue Growth: The company is showing continued, high-level revenue increase. Year-over-year sales growth for the trailing twelve months is at a notable 47.4%. This strength is steady on a quarterly basis, with the last four quarters showing sales growth rates grouped closely between 43.5% and 50.7%.
- Quickly Getting Better Profitability: While the company reports a negative EPS on a TTM basis, the direction is strongly positive. The most recent quarter saw EPS rise 114.3% year-over-year, after an even larger 153.8% increase in the quarter before. This speed-up in bottom-line betterment is a key part of the HGM Rating.
- Firm Free Cash Flow Generation: Free cash flow per share has grown greatly, showing growth of more than 385% compared to the year before. This shows the company's growth is turning into actual cash generation, a signal of financial strength and operational effectiveness.
- Positive Earnings Surprises and Revisions: Alignment Healthcare has exceeded EPS estimates in each of the last four quarters, with an average surprise of almost 100%. Also, analysts have become much more positive, increasing their earnings estimates for the next year by more than 41% in the last three months. These revisions are a forward-looking sign of belief and a vital piece in the momentum rating.
Technical Strength and Setup Quality
A firm growth story is most effective when paired with favorable price action. According to the detailed technical report, Alignment Healthcare does well here too, having a perfect TA Rating of 10. This score shows very good technical health across several timeframes.
- Strong Uptrend: Both the short-term and long-term trends for ALHC are rated as positive. The stock is trading above all its main moving averages (20, 50, 100, and 200-day), and each of these averages is itself in a rising pattern. This is the sign of a firm, continued uptrend.
- Market and Industry Position: The stock is doing better than 91% of the wider market and 93% of its peers in the Health Care Providers & Services industry over the past year. It is currently trading near its 52-week high, confirming its leading position.
- Favorable Consolidation: With a Setup Rating of 7, the chart indicates the stock is in a time of consolidation after its recent rise. The report notes that prices have been trading in a range between about $20 and $24 over the last month, with movement decreasing. This kind of pattern can sometimes come before a new move higher, as it lets the stock absorb its gains and form a new base of support.
- Clear Risk Levels: The technical analysis points out several support zones below the current price, with the closest ranging from $22.19 to $22.81. For a trader, this gives a clear area to set risk, a key part of any breakout setup.
Conclusion
Alignment Healthcare presents a case where notable fundamental momentum matches a firm technical position. The company's large revenue growth, quickly bettering earnings direction, and positive analyst revisions meet the main ideas of a high-growth momentum method. At the same time, its perfect technical rating confirms institutional backing and a strong uptrend, while the setup rating shows the stock may be resting in a consolidation, possibly giving a clear entry point. This mix is exactly what the screening process is made to find: fundamentally strong companies showing momentum at a technically favorable time.
For investors wanting to look at other stocks that meet this particular mix of high-growth momentum and technical breakout conditions, the screen that found ALHC can be viewed directly: View More High Growth Momentum Breakout Setups.
Disclaimer: This article is for information only and does not make up investment advice, a recommendation, or an offer to buy or sell any security. The analysis is based on data given and shows conditions at a specific time. Investing has risk, including the possible loss of principal. You should do your own research and talk with a qualified financial advisor before making any investment decisions.
