VITA COCO CO INC (NASDAQ:COCO): A Strong Growth Stock with Breakout Potential

Investors looking for high-growth opportunities often use both fundamental and technical analysis to find stocks with strong business performance and positive chart patterns. The "Strong Growth Stocks with Good Technical Setup Ratings" screen focuses on companies showing strong earnings and revenue growth, good profitability, and stable finances, while also displaying technical patterns that may lead to breakouts. This method helps identify stocks with both fundamental strength and short-term momentum potential.

The Vita Coco Co., Inc. (NASDAQ:COCO) stands out as a notable option under this strategy. The coconut water company shows solid growth numbers, financial stability, and a technical pattern that could signal a breakout. Below, we explore why COCO fits this screening approach.

Fundamental Strengths Supporting Growth

COCO’s fundamentals match the requirements for growth investing, as seen in its fundamental analysis report:

• Strong Growth Metrics:

  • Revenue has increased at an average yearly rate of 12.7% in recent years, with the latest year showing 11.96% growth.
  • Earnings Per Share (EPS) has risen at a 40.89% compound annual rate historically, with 15.05% year-over-year growth in the most recent period.
  • Future EPS growth is estimated at 19.38%, suggesting continued progress.

• Profitability and Efficiency:

  • Return on Invested Capital (ROIC) of 17.77% is better than 90.9% of beverage industry peers, showing effective use of capital.
  • Profit margins (11.5%) are higher than 78.8% of competitors, with steady improvement in recent years.

• Financial Health:

  • A ChartMill Health Rating of 9/10 reflects no debt, a current ratio of 3.51, and a quick ratio of 2.75, highlighting strong liquidity.
  • An Altman-Z score of 12.42 indicates low bankruptcy risk.

While COCO trades at a higher valuation (P/E of 31.01), its growth and profitability support this compared to peers.

Technical Setup Indicating Breakout Potential

The technical analysis report gives COCO a ChartMill Setup Rating of 7/10, suggesting a consolidation phase with possible upward movement:

• Price Action: COCO has retreated from its 52-week high of $40.32, finding support around $33.01, a level backed by moving averages and trendlines.
• Market Context: The stock has lagged the S&P 500 lately but remains 30% higher year-over-year, with signs of institutional interest in volume trends.
• Pattern Recognition: A bear flag pattern is visible, but holding above support could lead to an upward breakout, especially if the broader market stays strong.

Why These Criteria Matter

As explained in growth investing principles, successful growth stocks combine improving fundamentals with reasonable valuations. Technical patterns help identify entry points when price trends align with underlying strength. COCO’s mix of high growth, profitability, and a promising technical setup makes it worth watching.

Find More Growth Stocks

For investors searching for similar opportunities, the Strong Growth Stocks with Good Technical Setup Ratings screen offers more stocks meeting these criteria.

Disclaimer: This analysis is not investment advice. Do your own research or consult a financial advisor before making investment decisions.