A common challenge for growth-oriented investors is identifying companies that not only show strong basic business momentum but also present a timely technical chance for entry. One method to address this is by combining a screen for fundamental earnings momentum with a study of technical health and chart patterns. This approach tries to find stocks where speeding business performance matches a constructive price setup, possibly offering a good risk-reward situation. CNX Resources Corp (NYSE:CNX) recently appeared from such a multi-factor screen, deserving a more detailed look from investors using this strategy.
Fundamental Growth Momentum
The screen used the ChartMill High Growth Momentum (HGM) Rating, which combines several key growth and momentum measures into one score. For a stock to be considered, it needed a rating above 4. CNX Resources got a rating of 6, showing a good base of growth momentum. This score comes from a study of past performance, current speed, and future expectations.
Key fundamental drivers for CNX's HGM Rating include:
- Strong Year-Over-Year Growth: The company has shown big expansion over the past twelve months, with Earnings Per Share (EPS) growing by 40.8% and revenue rising by 23.5%.
- Exceptional Recent Sales Surge: The most recent quarter showed a notable year-over-year sales growth of nearly 347%, a standout number that signals strong near-term business momentum.
- Consistent Earnings Surprises: CNX has beaten EPS estimates in each of the last four quarters, with an average surprise of 48.4%. This steady outperformance against expectations is a classic sign of positive momentum that the HGM Rating captures.
- Good Free Cash Flow Generation: Free Cash Flow per share grew by 93.9% over the past year, highlighting the company's financial health and ability to fund operations and growth internally.
While the quarterly EPS growth has shown some changes and analyst estimates for the next year have seen small downward revisions, factors that stopped an even higher HGM score, the overall picture is one of a company performing at a high level and delivering good financial results. For momentum investors, these are the key criteria that separate steadily growing companies from those seeing a strong, investable rise in business performance.
Technical Strength and Setup Quality
Finding fundamental momentum is only one part of the process, deciding the right time to act is also very important. This is where technical analysis gives context. According to the detailed ChartMill Technical Report, CNX Resources shows both strong trend health and a hopeful consolidation pattern.
The stock gets a high Technical Rating of 9 out of 10. This score shows a good and steady uptrend across multiple timeframes.
Technical strengths highlighted in the report:
- Both the short-term and long-term trends are rated as positive.
- The stock is trading near a new 52-week high, showing leadership, especially notable against a broader market (S&P 500) that is not in a long-term uptrend.
- The price is positioned above key rising moving averages (20, 50, 100, and 200-day), confirming the strength of the current trend.
Perhaps more important for timing an entry, CNX has a Setup Rating of 8. This high score suggests the stock is coming out of a time of consolidation, giving a clearer view of support and resistance levels. The report notes that prices have been moving within a range over the past month and are currently testing the upper limit. This pattern can sometimes come before a continuation of the earlier uptrend. The analysis points out a nearby support zone around $38.89, which could act as a logical area for a stop-loss order, helping to set and control risk.
Conclusion: A Convergence of Factors
CNX Resources Corp presents a case where clear fundamental momentum meets a technically good chart setup. The company's strong earnings growth, cash flow increase, and history of beating estimates give the "growth" part that momentum strategies look for. At the same time, its strong price trend and the shape of a recent consolidation base address the "when" question, offering a structured plan for possible entry and risk management.
For investors interested in finding other securities that meet this combined standard of high growth momentum and good technical setups, the screen that found CNX can be a useful starting point. You can find more possible candidates by running the High Growth Momentum Breakout Setups screen.
Disclaimer: This article is for informational purposes only and does not make up 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 only basis for an investment decision. Investors should do their own study and think about their individual financial situation and risk tolerance before making any investment. Past performance is not a guide to future results.
