For investors looking to join solid core business progress with positive chart formations, a multi-factor screening method can be a useful instrument. One practical tactic involves selecting stocks that show solid earnings and sales improvement, a sign of high-growth momentum, while also displaying good technical condition and a helpful price formation ready for a possible advance. This technique tries to find companies where core strength is being acknowledged by the market, as seen in the price direction, and where the technical view indicates a lower-risk entry chance could be developing.
CIENA CORP (NYSE:CIEN) appears as a choice that fits these joined standards. The network technology firm, focused on hardware, software, and services for network operators, displays the sort of quickening operational results that growth investors look for.
High Growth Momentum Profile
The ChartMill High Growth Momentum Rating for CIEN is at a good 6 out of 10, signaling a sound mix of recent growth momentum and optimistic forward signals. This rating combines a number of important growth measures that are vital for momentum plans, as continued improvement often comes before more price gains.
- Earnings Improvement: The company's quarterly earnings per share (EPS) growth has shown marked quickening. Year-over-year growth jumped from 55.6% two quarters ago to 91.4% last quarter, and hit 68.5% in the latest quarter. This sequence of solid, consecutive improvement is a good sign.
- Sales Momentum: Revenue growth shares a comparable account. Sales growth quickened from 3.3% three quarters ago to 23.6%, then 29.4%, and most lately 20.3%. Analysts think this momentum will persist, with next quarter's sales forecast to grow more than 32%.
- Estimate Revisions: Analyst opinion is firming, a key part of the momentum rating. Over the last three months, the average estimate for next year's EPS has been adjusted higher by 22.5%, while revenue estimates have been increased by 8.1%.
- Cash Flow Growth: Beyond earnings, the company's free cash flow per share has increased by a notable 76% over the past year, showing sound financial condition and effective capital creation.
While the profit margin has shown some quarterly movement, a typical feature in growth periods, the yearly profit margin has grown from 2.09% to 2.59% in the last full year. Also, CIEN has a solid history of surpassing forecasts, beating EPS estimates in three of the last four quarters by an average of more than 18%.
Technical Strength and Setup Quality
A solid growth narrative is most effective when supported by the market's price movement. CIEN's technical condition is very good, receiving a complete ChartMill Technical Rating of 10. A complete breakdown of this study is present in the full technical report.
- Strong Uptrend: Both the long-term and short-term trends are scored as positive. The stock is trading notably above its important moving averages (20, 50, 100, and 200-day SMAs), which are all pointing up, a clear indicator of a maintained bull trend.
- Market Outperformance: CIEN is doing better than 97% of all stocks in the market over the past year and places in the top 9% of its Communications Equipment industry. Its 12-month gain of more than 202% confirms this outperformance.
- Consolidation and Setup: Maybe most significant for entry timing, CIEN shows a reasonable formation pattern with a Setup Rating of 7. The stock has been stabilizing its large advances in a set band over the past month. This halt in the uptrend lets the moving averages draw nearer and can create a foundation for the next step up. The technical report mentions very little barrier above the present price and notes a recent "Pocket Pivot" signal, which is a volume-based sign often linked to institutional buying during a stabilization.
The mix indicates the stock is not only increasing, but doing so in a sound, controlled manner. The set trading band gives clear markers for support and possible advance points, allowing for an organized method to position entry.
A Merging Chance
For investors using a high-growth momentum plan, CIEN shows a situation where fundamental and technical studies merge. The company is showing the sort of quickening quarterly earnings and sales growth, together with climbing analyst estimates, that create the heart of momentum investing. This core momentum is being confirmed by an almost faultless technical chart marked by good relative performance and a leading uptrend.
Importantly, the present price movement is not showing a stretched, steep climb. Instead, the stock is creating a stabilization inside its uptrend, giving a possible formation. This lets investors assess the stock not only because it has risen, but because the circumstances for a continued move could be coming together, with set technical points helping to control risk.
This screen is made to find like chances where growth momentum meets technical preparation. For investors wanting to examine other stocks that presently match this particular profile of high growth momentum and technical advance formations, the screen can be reached directly here: High Growth Momentum Breakout Setups Screen.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. The analysis is based on data provided and should not be the sole basis for an investment decision. All investing involves risk, including the potential loss of principal. Always conduct your own due diligence and consider consulting with a qualified financial advisor before making any investment decisions.
