Broadcom Inc. (NASDAQ:AVGO) Identified as a Strong Growth Stock with Bullish Technical Setup

For investors aiming to benefit from large price gains, a mixed technical and fundamental method can be an effective plan. One technique filters for stocks displaying solid core business expansion—backed by strong fundamentals such as profit growth and good margins—while also presenting encouraging technical formations that indicate a possible rise from a period of sideways movement. This two-part method tries to find firms with both the foundation for lasting achievement and the current force for a price shift. A recent filter for "Strong Growth Stocks with good Technical Setup Ratings" has identified Broadcom Inc. (NASDAQ:AVGO) as a prospect deserving more detailed study.

A Base of Outstanding Expansion

Fundamentally, the filtering plan focuses on firms with clear and quickening business speed. Broadcom’s fundamental picture, as described in its fundamental analysis report, performs very well in this field, receiving a top Growth Rating of 10 out of 10. The firm is not merely expanding; it is quickening.

• Strong Recent Results: In the last year, Broadcom’s Earnings Per Share (EPS) increased by 40.47%, while Revenue rose by a notable 23.87%.
• Continued Past Performance: This is not an isolated incident. The firm has achieved average yearly EPS growth of 25.23% and Revenue growth of 21.74% over recent years.
• A More Positive Outlook: Importantly, this solid expansion is predicted to persist. Analysts forecast average yearly EPS growth of 28.32% and Revenue growth of 29.08% in the next years, pointing to a quickening from an already high level.

This outstanding expansion story is central to the plan because it supplies the fundamental reason for a possible stock price gain. A firm steadily increasing its profits at a high pace builds inherent value, which the market frequently recognizes over time.

Earnings and Fiscal Soundness

Solid expansion must be paired with good performance. A firm can grow income but lose value if it is not earning money or is fiscally unsound. The filtering standards thus demand acceptable scores in Earnings and Fiscal Soundness to confirm the expansion is lasting. Broadcom’s report displays a high Earnings Rating of 9/10, backed by sector-leading margins.

• Leading Margins: The firm’s Operating Margin of 40.94% and Profit Margin of 36.20% are better than over 96% and 95% of its semiconductor sector competitors, in order.
• Strong Returns on Capital: Its Return on Equity (ROE) of 28.45% is excellent, putting it in the top 9% of the sector.

The Fiscal Soundness Rating of 5/10 gives a more varied image, which is a point for investors to watch. While the firm has a workable debt amount compared to its good free cash flow, its liquidity ratios (Current and Quick Ratio) are lower than sector averages. However, the report states that its high Altman-Z score shows no bankruptcy danger, and its debt is sufficiently covered by cash flow. For a plan centered on expansion, the key elements are the strong earnings and cash creation that finance more growth and new ideas.

The Technical Formation for a Possible Rise

Finding a solid fundamental narrative is only part of the process. The technical study attempts to locate a good entry point by evaluating market feeling and price movement. Based on Broadcom’s technical analysis report, the stock offers an interesting formation with a Setup Rating of 8 out of 10.

The report states that while the near-term direction is neutral, the longer-term direction stays positive. More significantly, the price has been moving sideways in a band between about $321 and $362 over the last month and is now trading close to the top of this band. This period of sideways movement after a solid longer-term upward direction can sometimes come before a new upward move.

• Main Hurdle and Base: A clear hurdle zone sits just above the present price, between $354.62 and $359.38. A clear move above this zone might mark the beginning of a new positive period.
• Clear Risk Control: Below the present price, a base zone near $350.49 gives a possible area for setting a stop-loss order, offering a defined risk limit for traders. This pairing of a hurdle level to pass and a close base level for safety forms the organized "formation" the filter looks for.

Price Assessment in Perspective

With a trailing P/E ratio above 50, Broadcom is not a traditional low-price stock. Its Valuation Rating of 4/10 shows this high price. However, for an expansion investor, price assessment must be viewed with the expansion pace. The fundamental report shows that the stock’s PEG ratio, which includes profit expansion, indicates a more fair price. Also, when measured against its own high-expansion semiconductor sector competitors, Broadcom’s price is actually under the sector average on multiple measures. The high price can be explained by its sector-leading earnings and the outstanding, quickening expansion path described before.

Summary

Broadcom Inc. (AVGO) represents the kind of firm a mixed expansion and technical formation filter tries to discover. It has a strong fundamental engine, marked by quickening income and profit expansion, excellent earnings, and a leading market place in important semiconductor and infrastructure software markets. Technically, it is coming out of a period of sideways movement near the top of its band, forming up for a possible rise that could match its solid fundamental speed.

This filter and others similar to it are made to methodically find such chances. You can review more stocks that match this "Strong Growth Stocks with good Technical Setup Ratings" description by using the pre-set filter on ChartMill.

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Disclaimer: This article is for information and learning only and does not form investment guidance, a suggestion, or a bid or request to buy or sell any securities. The study shown is based on data and reports accessible at the time of writing and could change. Investors should do their own complete study and think about their personal money situation and risk comfort before making any investment choices. Past results do not guarantee future outcomes.