For investors looking to join solid fundamental growth with good technical entry points, a multi-factor screening method can be a useful instrument. One approach finds stocks that show high earnings momentum, sound technical condition, and a defined chart pattern ready for a possible breakout. This method tries to find companies not just increasing at a fast rate but also trading in a way that points to institutional buying and a manageable entry point. By selecting for a high ChartMill High Growth Momentum Rating (HGM), a good Technical Rating (TA), and a high Setup Quality Rating, investors can find securities where fundamental force and technical timing might align.
BLOOM ENERGY CORP- A (NYSE:BE) appears from such a screen, presenting an interesting case for growth-focused investors. The company, a supplier of solid oxide fuel-cell based power generation and hydrogen electrolyzer technology, displays the type of strong financial numbers that momentum methods aim to use.
Fundamental Growth Momentum
The heart of a high growth momentum method is finding companies with speeding business trends. Bloom Energy’s recent financial results show several signs that add to its good HGM Rating of 6.
- Outstanding Earnings Growth: The company’s trailing twelve-month (TTM) EPS has increased by a remarkable 284.2% year-over-year. Even more significant is the sequential speed increase in recent quarterly growth rates, rising from 117.6% three quarters ago to 1,600% in the last quarter.
- Solid and Speeding Revenue: Top-line growth is sound, with TTM revenue up 37.3%. Quarterly sales growth has also shown speeding, moving from 19.5% two quarters ago to 57.1% last quarter, with forecasts indicating 68.5% growth in the next quarter.
- Steady Positive Surprises: Bloom Energy has exceeded analyst EPS estimates in each of the past four quarters, with an average surprise of 260.4%. It has also surpassed revenue estimates in all four quarters. This steady overperformance creates trust and often results in positive analyst changes, another important momentum element.
- Getting Better Profitability and Cash Flow: The company reported a profit margin of 14.0% in its most recent quarter, a key turn toward continued profitability. Also, free cash flow per share has increased by 72.5% over the past year, making the company’s financial position stronger.
These numbers, speeding growth, widening margins, and steady earnings surprises, are exactly what the HGM Rating is made to find, indicating a company in a strong fundamental rise.
Technical Force and Setup Quality
While good fundamentals give the "why" for investment, technical study gives insight into the "when." According to the detailed ChartMill Technical Report, Bloom Energy’s chart shows a view of notable force with a specific consolidation pattern.
- Ideal Technical Condition: BE receives a top-level Technical Rating of 10 out of 10. This score shows a strong long-term positive trend, with the stock price trading well above all main moving averages (20, 50, 100, and 200-day). Its relative force is notable, doing better than 99% of all stocks over the past year and 98% of its group in the Electrical Equipment industry.
- Good Consolidation: Despite its strong uptrend, the stock is not too stretched. It currently has a Setup Rating of 7, showing it has been trading in a consolidation range over the past month ($130.00 - $176.49). This time of pause after a large rise lets the stock form a new base of support, giving a clearer area for setting risk.
- Defined Support and Resistance: The technical study finds a main support area between $143.02 and $144.88, made by several trendlines. This gives a sensible level for a protective stop-loss order. With almost no resistance seen above the current price, a move above the recent consolidation high could signal the next part of the trend.
- Helpful Market Setting: The wider market condition is helpful, with the S&P 500 in a positive long-term and short-term trend. This support can be good for high-momentum stocks trying to break out of consolidations.
The mix of a perfect technical rating and a constructive setup pattern suggests the stock’s strong fundamental story is being seen in the price action, yet it may be giving a calculated chance for entry.
Conclusion
Bloom Energy shows a case where a screening process made for high growth momentum investors has found a company with strong fundamental numbers trading within a technically good pattern. The speeding EPS and sales growth, move toward profitability, and steady earnings beats form an interesting fundamental story. This story is backed by a chart showing leading relative force and a consolidation phase that may be preparing for a continuation of the trend.
For investors using methods similar to CANSLIM or those looking for growth stocks in workable setups, BE deserves more study. Its profile shows the worth of a structured process that looks at both the basic business momentum and the market’s technical agreement of that story.
Interested in finding other stocks that meet these conditions of high growth momentum and technical breakout setups? You can run the screen yourself using this High Growth Momentum Breakout Setups Screen.
Disclaimer: This article is for information and learning only. It does not form a suggestion to buy, sell, or hold any security. The study is based on given data and should not be seen as investment guidance. All investing has risk, including the possible loss of principal. Always do your own research and think about your personal financial position and risk tolerance before making any investment choices.