For investors looking to combine the best of both fundamental strength and technical timing, a screen that targets "Strong Growth Stocks with good Technical Setup Ratings" can be highly effective. This approach first filters for companies demonstrating solid earnings and revenue acceleration, hallmarks of a true growth stock. It then overlays a technical filter to identify stocks that are consolidating or forming a potential breakout pattern, offering a favorable risk/reward entry point. The idea is to buy high-quality companies that are not just performing well on paper but are also showing signs of a near-term upward price move. Vita Coco Co Inc/The (NASDAQ:COCO) is a strong candidate that recently passed through this dual-filtered screen.
Fundamental Strength: A Growth Leader in Beverages
When evaluating growth stocks, the quantitative fundamental metrics are the first line of defense. Vita Coco scores exceptionally well in this area, earning a ChartMill Growth Rating of 8 out of 10 according to its fundamental analysis report. This high rating is backed by concrete numbers.
The company has delivered impressive top and bottom-line growth that far exceeds typical industry peers.
- Earnings Per Share (EPS) Growth: The EPS has surged by 25.53% over the past year, with an average annual growth rate of 15.05% over the trailing years.
- Revenue Growth: Revenue has grown by 18.17% in the last year, with a solid 14.44% average annual growth rate over a longer period.
- Future Growth Outlook: Analysts expect this momentum to continue. Future EPS is forecast to grow at a strong 20.88% annually, with revenue expected to increase by 11.37%.
This trajectory is the very definition of a growth stock. The company is scaling its Vita Coco coconut water, Ever & Ever water, and other brands effectively, expanding its reach across the U.S. and international markets.
Financial Health and Profitability
A growth stock is only interesting if the company’s foundation is solid. The screen requires "decent profitability and health," and Vita Coco delivers on both fronts. The ChartMill Health Rating stands at an excellent 9 out of 10, indicating a fortress-like balance sheet.
- No Debt: Vita Coco has zero outstanding debt, making its Debt/Equity and Debt/FCF ratios 0. This places it among the top of the industry.
- Strong Liquidity: With a Current Ratio of 3.62 and a Quick Ratio of 2.66, the company has more than enough cash to cover its short-term obligations.
On the profitability side, with a rating of 6 out of 10, the company is above average. Return on Equity (ROE) of 21.51% and Return on Invested Capital (ROIC) of 18.64% are both well above industry averages, signaling that management is efficiently deploying capital to generate returns.
Technical Setup: Consolidation and an Opportunity
While the fundamentals confirm the quality of the business, the technical report provides the timing. The technical analysis for COCO shows the stock has a Technical Rating of 3 out of 10 overall, but this is misleading at first glance. The most critical metric for the screen is the Setup Rating, which is a favorable 7 out of 10.
This high setup rating indicates that the stock is currently in a consolidation phase, which often precedes a breakout. The stock is trading near the lower end of its recent range (around $47.42), with a clear support zone between $46.51 and $46.96. A potential entry point could be identified just above the resistance zone at $50.95 to $51.01. This pattern suggests that the selling pressure is easing and volatility is compressing, setting the stage for the next move higher. While the short-term trend is negative, the long-term trend remains neutral, and the stock’s 53.86% appreciation over the past year shows its overall momentum.
Valuation Considerations
It is worth noting that growth often comes at a price. The ChartMill Valuation Rating is a low 2 out of 10. The stock trades at a Price/Earnings ratio of 40.19, which is expensive compared to the industry average of 16.74. However, when using the PEG Ratio (NY)—which compensates the PE for earnings growth—the valuation appears more balanced. The expectation of 20.88% EPS growth helps justify the premium, making this a classic "growth at a reasonable price" consideration rather than a simple value play.
Analyst Views and Market Context
The broader market context is supportive. The S&P 500 is currently in a positive long-term and short-term trend, providing a tailwind for growth stocks. While Vita Coco is trading in the middle of its 52-week range and has a relatively wide daily trading range, its consistent upward price pattern and strong volume (average of 1.4 million shares traded per day) confirm high investor interest.
Find More Strong Growth Stocks
Vita Coco exemplifies the type of stock that the "Strong Growth Stocks with good Technical Setup Ratings" screen is designed to find: a financially healthy, quickly growing company that is currently setting up for a potential technical breakout. By combining these two analytical approaches, investors can identify high-conviction opportunities that others might miss. For more stocks that meet these strict criteria, you can view the full results via this screening link.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Past performance is not a guarantee of future results. Always conduct your own research before making any investment decisions.