Celestica Inc (NYSE:CLS) Exhibits High-Growth Momentum and Technical Strength

Celestica Inc (NYSE:CLS) has recently appeared on a specific stock screen made to find high-growth momentum stocks that also meet the strict technical requirements of Mark Minervini's Trend Template. This two-part method aims to find companies that are in strong, lasting uptrends and are also supported by outstanding and improving fundamental growth. The idea is based on the belief that the strongest stock market gains come from strength in both price action and basic business numbers, forming a strong mix for possible price gains.

Technical Strength: Following the Minervini Trend Template

A main idea of the Minervini strategy is to invest with the current trend, looking only at stocks showing better relative performance and clear technical well-being. Celestica's present chart shows a strong match with the main parts of the Trend Template, which is made to find such qualities.

• Price Above Key Moving Averages: The stock is trading notably above its rising 50-day ($279.93), 150-day ($192.82), and 200-day ($169.35) simple moving averages. This ordered and rising setup of moving averages is a typical sign of a solid Stage 2 uptrend, showing continued buying interest across different time periods.
• Proximity to 52-Week Highs: With a present price of $299.92, CLS is trading much higher than its 52-week low of $58.05 and is reasonably close to its 52-week high of $363.40. Minervini's method prefers stocks showing strength by trading near their peaks, as they are frequently market leaders set for more progress.
• Outstanding Relative Strength: Maybe most notably, Celestica has a ChartMill Relative Strength (CRS) rating of 98.38. This shows that the stock has done better than 98% of the whole market over the last year. A high RS rating is a fundamental part of the strategy, as it finds stocks with lasting demand that are driving the market upward.

This technical setup implies that CLS is seeing notable buying interest and is acting exactly like the market-leading stocks the Minervini strategy aims to find.

Fundamental Momentum: The Driver of Growth

While a solid chart is important, the Minervini method gives similar weight to strong fundamental growth to support continued price momentum. Celestica's financial numbers show a company in a strong growth period, matching the "High Growth Momentum" description well.

• Improving Earnings Growth: The company is showing notable earnings ability. Its EPS growth on a trailing twelve-month (TTM) basis is 48%, and this strength is steady on a quarterly basis, with the last quarter showing year-over-year growth of 52%. This sequence of high, and sometimes improving, quarterly growth is a main feature of top-performing stocks.
• Solid and Increasing Revenue: Top-line growth is similarly strong, with TTM revenue growth of 22% and the latest quarter growing 28% year-over-year. Lasting stock price increases are often built on the base of growing revenues, not just reduced expenses.
• Growing Profitability: A vital signal of operational quality is better profit margins. Celestica's profit margin in the last reported quarter was 8.38%, a notable increase from 7.29% the previous quarter and 3.25% two quarters ago. This pattern shows the company is not only growing, but also becoming more profitable as it gets larger.
• Positive Analyst Revisions: The market's future expectations are also increasing, with the average analyst EPS estimate for the next year being raised by over 21% in the last three months. Upward revisions often come before more price increases as the market adapts to a better outlook.

These fundamental points provide the "catalyst" that Minervini searches for, indicating the technical move upward is backed by real business results.

Technical Report Summary

The complete technical analysis for Celestica gives the stock a high rating of 10 out of 10, reflecting its outstanding technical condition. The report mentions a steady performance in both short and long-term periods and a constant better performance compared to the whole market. While the long-term trend is clearly positive, the report does note that the present setup is not perfect for a new purchase because of recent price swings, indicating investors should look for a period of stability to find a lower-risk chance to buy.

For a complete look at the support levels, trend study, and other technical points, you can see the full technical report for CLS here.

Finding Similar Chances

Celestica acts as a good model of a stock that fits a controlled growth and momentum strategy. For investors looking to find other companies with similar setups of solid technical trends and strong fundamental growth, this method can be used in a regular way.

You can find more possible choices by using the "High Growth Momentum + Trend Template" screen on ChartMill.

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