CARETRUST REIT INC (NYSE:CTRE): A Strong Growth and Technical Breakout Candidate

Investors seeking opportunities in the equity markets often face a choice between fundamental and technical analysis. An interesting approach combines the two, seeking companies with strong underlying business growth that are also exhibiting positive price momentum. This strategy aims to identify stocks where good financial health and accelerating earnings are being confirmed by market action, potentially signaling the beginning of a sustained upward trend. The goal is to find companies not just with promising futures, but whose charts are beginning to reflect that promise.

CARETRUST REIT INC (NYSE:CTRE) recently surfaced from a screen designed to pinpoint such opportunities, specifically targeting strong growth stocks displaying promising technical breakout patterns. This healthcare-focused real estate investment trust appears to align with the criteria that this combined methodology values.

Strong Fundamental Growth Profile

The cornerstone of this strategy is identifying companies with exceptional growth trajectories, and CareTrust’s fundamental report highlights its qualifications in this area. The company earns a top-tier ChartMill Growth Rating of 9 out of 10, placing it within the leading growers in its sector. This rating is supported by impressive historical and projected financial metrics.

• Explosive Recent Growth: Over the past year, CareTrust has demonstrated remarkable expansion, with Earnings Per Share (EPS) surging by 108.47% and Revenue growing by 50.83%.
• Sustained Historical Performance: Looking back over several years, the company has maintained a solid track record, with an average annual EPS growth of 11.30% and Revenue growth of 12.64%.
• Accelerating Future Expectations: Perhaps most importantly, the growth story is expected to continue. Analysts project an average annual EPS growth of 23.02% and Revenue growth of 27.83% in the coming years, indicating an acceleration from historical rates.

This good growth is complemented by strong profitability, with a ChartMill Profitability Rating of 8. The company has excellent margins, including an Operating Margin of 66.50% that outperforms 99% of its industry peers. While the financial health rating is a moderate 5, it is supported by a healthy debt-to-equity ratio of 0.35, which is better than 96% of its competitors. This combination of explosive growth, high profitability, and a manageable debt load forms an interesting fundamental picture, which is a primary filter in the screening strategy to ensure the company's intrinsic value is increasing.

Supportive Technical Breakout Setup

A strong fundamental story is only half of the equation; the technical analysis reveals whether the market is acknowledging this strength. CareTrust’s technical report paints a bullish picture, awarding it a high technical rating of 8. The stock is currently exhibiting a classic consolidation pattern just below a key resistance level, suggesting a potential breakout is imminent.

• Positive Trend Alignment: Both the short-term and long-term trends for CTRE are positive, a very encouraging sign that aligns with the overall positive trend of the S&P 500.
• Trading Near Highs: The stock is currently trading near its 52-week high, a strong signal of momentum. It has significantly outperformed the majority of stocks in the market over the past year.
• Clear Resistance and Support: The chart shows a well-defined resistance zone around $34.81. A decisive move above this level could signal the start of a new leg up. Below the current price, there is a strong support zone between $33.06 and $34.40, providing a logical level for a stop-loss order should the breakout fail.

This technical setup is critical for the strategy because it provides a potential entry point. The strong growth fundamentals provide the "why" for an investment, while the technical breakout pattern offers the "when," aiming to enter a position as the stock begins a new upward phase.

A Converging Opportunity

CareTrust REIT presents a case where fundamental strength and technical positioning are converging. The company’s exceptional growth metrics and high profitability validate it as a legitimate growth stock. Simultaneously, its chart shows it is on the verge of breaking out to new highs, confirming the fundamental story with positive price action. For investors employing a growth-at-a-reasonable-price strategy with technical confirmation, CTRE represents an interesting candidate worthy of further research. The screening methodology is designed to find such alignments, where the quantitative health of the business is mirrored by constructive market behavior.

This combination of factors is what the "Strong Growth Stocks with good Technical Setup Ratings" screen is designed to uncover. If you are interested in exploring other companies that meet these specific criteria, you can view the complete screen results here.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The information presented on CARETRUST REIT INC (CTRE), including links to its fundamental analysis and technical analysis reports, should not be the sole basis for making any investment decision. Investors should conduct their own thorough research and consult with a qualified financial advisor before making any investment choices. All investments involve risk, including the possible loss of principal.