For investors looking to join strong earnings momentum with positive chart patterns, a multi-factor screen can be a useful beginning. By selecting for stocks with a high High Growth Momentum (HGM) Rating, a good Technical Analysis (TA) Rating, and a high Setup Quality Rating, the aim is to find companies that are both seeing improving fundamental performance and are also set up technically for a possible move higher. This method combines the growth ideas of strategies like CANSLIM with careful technical entry points, seeking to enter stocks as their earnings strength is acknowledged by the market.
Fundamental Growth Momentum
ARCHROCK INC (NYSE:AROC) shows a positive fundamental growth picture, receiving a ChartMill High Growth Momentum Rating of 6. This rating brings together several important momentum measures that matter for growth investors. The company is showing notable and improving earnings strength, a key part of growth investing.
- Earnings Growth Improvement: The year-over-year EPS growth for the latest quarter is 81.8%. Significantly, this is an improvement from the growth rates of 69.6%, 57.7%, and 61.9% from the three quarters before. This sequence of improving quarterly earnings growth is a very positive sign of increasing business speed.
- Good Yearly Growth: On a wider view, the trailing twelve-month (TTM) EPS has increased by 67.4% from the earlier period. This comes after a full-year EPS growth of 56.7% last year and a large 123.3% the year before, showing a multi-year pattern of strong earnings growth.
- Margin Improvement and Cash Flow: The fundamental progress is also backed by growing profitability. The company's profit margin last quarter was 18.5%, up from 16.4% the quarter before and a clear rise from the 5.1% margin reported two fiscal years ago. Also, free cash flow per share has risen by 135% over the past year, showing the earnings growth is becoming real cash creation.
- Analyst Outlook: The future view is also positive, with analysts increasing their next-year EPS estimates by 0.85% over the last three months. This upward estimate change points to more belief in the company's ongoing earnings path.
Technical Strength and Setup Quality
While the fundamental story gives the "why," the technical view gives the "when." According to the detailed ChartMill Technical Report, AROC gets a good TA Rating of 7 and a high Setup Rating of 9. This pair shows the stock is in a positive uptrend and is currently resting in a pattern that might come before a new upward move.
- Positive Trend Setup: Both the long-term and short-term trends for AROC are positive. The stock is priced above its important moving averages (20, 50, and 100-day), which are all rising, confirming the upward trend setup.
- Resting Period and Support: The high Setup Rating of 9 is especially important. It shows the stock has been trading in a fairly narrow range lately, letting it absorb its earlier advances. This resting period has made a clear support area near $26.41, formed by a meeting of trendlines and moving averages. For a trader, this gives a sensible level to set a protective stop-loss order.
- Move Higher Potential: The technical analysis points to a possible entry point just above the recent range at $27.39. A price move above this level could show a restart of the uptrend. The report also mentions a recent "Pocket Pivot" signal, a volume-based sign often linked to institutional buying during a resting phase, adding another piece of positive technical information.
Bringing It Together
For a high growth momentum investor, the attraction of AROC is in the connection between its fundamental improvement and its technical state. The high HGM Rating confirms the company is in a period of strong earnings increase with growing margins, the type of fundamental driver that can lead to continued price gains. The good TA and Setup Ratings show the market has started to value this progress, placing the stock in a positive trend, and it is now waiting in a rest that may give a lower-risk entry chance before a possible move higher.
This match is the main goal of the screening method: to find companies where fundamental speed is being supported by price movement, and where that price movement is forming for a clear, technically reasonable trading chance.
Find More Possible Setups
The screen that found ARCHROCK INC is made to find similar chances where high growth fundamentals meet positive technical setups. Investors wanting to see the current list of passing stocks can view the results through the High Growth Momentum Breakout Setups Screen.
Disclaimer: This article is for information only and is not investment advice, a suggestion, or an offer to buy or sell any security. The analysis uses given data and has natural risks. Investors should do their own research and think about their personal money situation and risk comfort before making any investment choices. Past results do not guarantee future outcomes.
