The method used to find possible investment candidates joins a strict technical structure with attention to fundamental growth momentum. This process is based on the ideas of Mark Minervini's SEPA (Specific Entry Point Analysis) plan, which aims to locate stocks showing solid, confirmed uptrends together with speeding up business fundamentals. The technical base comes from Minervini's Trend Template, a checklist made to sort for stocks in a definite Stage 2 climb, making sure they are market leaders with good momentum. This is then combined with a filter for High Growth Momentum (HGM), which examines earnings and sales patterns to find companies showing strong fundamental progress. The aim is to locate securities where better technical strength is supported by the basic business speed increase, forming a combination of elements that have come before major price gains.
Meeting the Minervini Trend Template
For a trader using Minervini's strict process, COMPASS MINERALS INTERNATIONAL (NYSE:CMP) shows a strong technical view. The Trend Template's main job is to make sure a stock is in a confirmed, good uptrend across several time periods, and CMP now matches these important points:
- Trend Alignment: The stock price is trading above its main rising moving averages (50-day, 150-day, and 200-day), a clear signal of bullish alignment. Significantly, the 50-day SMA ($21.87) is above the 150-day SMA ($19.92), which is above the 200-day SMA ($19.74). This step-by-step order shows a solid, layered trend formation.
- Proximity to Highs: A central idea of the plan is to concentrate on strength, not weakness. CMP's present price is about 179% above its 52-week low of $8.60, showing it has already made a strong recovery and climb. At the same time, it is trading within 11% of its 52-week high of $27.00, showing it is acting like a market leader and not falling behind.
- Superior Relative Strength: With a ChartMill Relative Strength (CRS) score of 95.4, CMP is doing better than 95% of all stocks over the last year. Minervini stresses that the largest winners usually show high relative strength early in their advances, as it points to institutional buying and sector leadership.
This technical arrangement indicates CMP is in a Stage 2 uptrend, the exact period where Minervini's plan aims to find lower-risk entry points during pauses inside the larger climb.
Fundamentals Supporting High Growth Momentum
While the Trend Template confirms the "how," the High Growth Momentum rating tries to answer the "why" behind the price movement. For CMP, the recent fundamental view shows a major recovery and speed increase, which is just what growth investors search for.
- Explosive Earnings Rebound: The most notable numbers are in earnings per share (EPS). The trailing twelve-month (TTM) EPS growth is at a remarkable 159.5%. More significantly, the speed increase is clear in recent quarters. The latest quarterly EPS grew 178.2% year-over-year, after a 77.9% growth in the quarter before. This sequence of speeding up quarterly growth is a main sign of positive fundamental momentum.
- Positive Earnings Surprises: The company has exceeded analyst EPS estimates in three of the last four quarters, with an average surprise above 3,000%. While this number can be affected by very low starting estimates, the steady pattern of beating expectations shows underlying business results are surpassing market predictions.
- Improving Cash Flow and Margins: Supporting the earnings story, free cash flow per share has jumped 171.6% over the past year. Also, the profit margin in the last reported quarter was 4.7%, a clear improvement that suggests the company is changing revenue into earnings more effectively.
It is significant to see that not all fundamental measures are all positive. Revenue growth on a TTM basis is negative, and analyst estimates for the next year have been adjusted lower lately. This shows the choosy character of the momentum process; the attention is on the rate of change and speed increase in main profit measures, which for CMP are now pointing steeply upward. The plan suggests that when earnings turn from very negative to strongly positive, it can push a major re-rating of the stock.
Technical Health and Setup Summary
A look at the given technical analysis report gives a combined view. CMP gets a solid Technical Rating of 8 out of 10, reflecting its good long-term positive trend and better yearly results compared to similar stocks. The report states the stock is trading in the higher part of its 52-week range and points out several support areas below the present price, including a main zone between $21.75 and $21.87 made by meeting moving averages and trendlines. The setup rating of 5 indicates that while the stock is technically sound, it may be in a pause period inside its wider uptrend, which for a Minervini-style trader would be the time to look for a new volatility squeeze pattern and following breakout.
You can examine the full technical analysis in the detailed ChartMill Technical Report for CMP.
Finding Similar Opportunities
CMP shows the kind of security that passes through a joined filter of trend and growth momentum. Investors wanting to use this methodical process to discover other possible candidates can run the same screen. Click here to view the current results of the 'High Growth Momentum + Trend Template' screen.
Disclaimer: This article is for informational and educational purposes only. It is not a recommendation to buy or sell any security. The analysis is based on data provided and certain methodological screens; it does not constitute investment advice. Investors should conduct their own thorough research, consider their financial situation, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.
