Collegium Pharmaceutical Inc (NASDAQ:COLL) Fits the Minervini Growth Momentum Strategy

In the search for high-potential stocks, many investors and traders join detailed technical study with fundamental growth measures. One noted method that mixes these fields is the strategy made known by Mark Minervini. His system, often called the Specific Entry Point Analysis (SEPA), methodically sorts for stocks showing solid, confirmed uptrends, verified by his Trend Template, while also requiring strong and improving fundamental growth. This two-step method seeks to identify market leaders early in their large price gains, concentrating on power and momentum instead of trying to catch falling prices. The aim is to locate securities where forceful earnings and sales patterns are supported by positive price movement, forming a combination of elements that has come before notable outperformance.

Collegium Pharmaceutical Inc (NASDAQ:COLL) stands as a present candidate that seems to meet the central ideas of this joined strategy. A detailed look at its technical state and fundamental outline shows why it may attract growth-focused investors using such a structured system.

Meeting the Minervini Trend Template

The Minervini Trend Template is a basic technical filter made to confirm a stock is in a verified, strong uptrend across several time periods. It serves as a checkpoint, removing stocks that do not have clear directional power. COLL presently shows a notable fit with these technical rules:

• Price Above Key Moving Averages: The stock's last price of $48.90 trades well above its rising 50-day ($41.36), 150-day ($35.88), and 200-day ($33.98) simple moving averages. This layered order is a standard sign of continued positive momentum.
• Moving Average Order: The shorter 50-day moving average is placed above both the 150-day and 200-day averages, while the 150-day is also above the 200-day. This sequence confirms that the uptrend is well-formed and gaining speed.
• Nearness to Highs: A central idea of the Minervini view is to concentrate on strength, not weakness. COLL trades within 1.2% of its 52-week high of $49.49, showing leadership and an absence of overhead supply. Also, its present price is over 110% above its 52-week low, signaling a strong recovery and trend.
• Better Relative Strength: Maybe most important, COLL holds a ChartMill Relative Strength (CRS) ranking of 93.79. This means it is doing better than nearly 94% of all stocks in the market over the past year, a sign of the market leaders Minervini looks for. It also does better than 80% of its group in the Pharmaceuticals industry.

This technical view meets the Trend Template's purpose: to find stocks already in a Stage 2 climb, where the direction of least resistance is clearly higher and the stock is displaying clear leadership.

Fundamentals for High Growth Momentum

While the Trend Template handles the "when," the "why" of a continued move often exists in the basic business results. The High Growth Momentum (HGM) part of the filter looks for companies showing forceful and often improving financial growth, which usually serves as the reason for institutional buying and continued price gains. COLL's recent financial numbers show several good patterns:

• Solid Earnings Growth: The company has displayed notable year-over-year earnings per share (EPS) growth. Its TTM EPS grew over 30%, and the latest quarter saw a nearly 40% jump compared to the same time last year. This increase in speed is a key positive sign.
• Steady Earnings Surprises: A sign of momentum is when a company regularly beats expectations. COLL has topped analyst EPS estimates in each of the past four quarters, with an average beat over 6%. This series of positive surprises can drive upward changes and fresh investor attention.
• Strong Revenue Growth: Top-line growth is also good, with TTM revenue up over 26% and the last quarter growing by more than 31% year-over-year. The company has also beaten revenue estimates in three of the past four quarters.
• Good Profitability: The company's profit margin in the last reported quarter was a sound 15.05%, showing it can turn strong revenues into net income.

These fundamental traits fit with the growth-seeking part of the strategy. Minervini states that "big earnings attract big attention," and COLL's mix of strong sales growth, growing profits, and a record of beating expectations gives a fundamental reason that supports its positive technical formation.

Technical Health and Setup Summary

Beyond the specific Trend Template rules, COLL's overall technical health is strong. According to ChartMill's own analysis, the stock receives a perfect Technical Rating of 10 out of 10, showing unusual strength across both short and long-term time periods. The long-term and short-term trends are both seen as positive. The analysis notes the stock is trading in a wide recent band but is presently testing the higher end of that band, near a set resistance area between $48.91 and $49.02.

The setup quality is rated a 6, signaling a time of consolidation after its recent rise. The technical report indicates a possible trading setup with an entry just above the noted resistance, giving a clearly set, close support level for risk control. For a detailed view of the support and resistance levels, and the complete automated analysis, you can examine the full technical report for COLL.

Finding Similar Opportunities

Collegium Pharmaceutical shows the kind of candidate that appears when filtering for the meeting point of strong trends and fundamental momentum. For investors looking to use this two-step method to find other possible opportunities, the preset filter that found COLL can be a useful beginning point.

You can examine the present results of this "High Growth Momentum + Trend Template" filter yourself via this link: High Growth Momentum + Trend Template Screen.

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Disclaimer: This article is for informational and educational purposes only. It is not intended as investment advice, a recommendation, or an offer to buy or sell any security. The analysis presented is based on current data and methods, which are subject to change. Investing in stocks involves risk, including the possible loss of principal. Always do your own complete research, think about your personal financial situation and risk tolerance, and talk with a qualified financial advisor before making any investment choices. Past performance is not a guide to future results.