A common challenge for growth investors is identifying companies with solid expansion potential before their share prices fully reflect that path. One method to address this is a combined approach, looking for stocks that show strong fundamental growth traits while also displaying positive technical patterns indicating a possible breakout. This strategy aims to match the business momentum with good market timing, looking for chances where better fundamentals may be ready to start a new period of price increase.
CareTrust REIT Inc (NYSE:CTRE) works as a real estate investment trust centered on owning, buying, and leasing healthcare-related properties, such as skilled nursing and senior housing facilities across the United States and the United Kingdom. The company's holdings are mainly net-leased to independent operators, offering a fairly steady income stream connected to the basic needs of the aging population group.
Strong Fundamental Growth Profile
The foundation of this screening strategy is finding companies with clear and expected above-average growth. CareTrust REIT’s fundamental report shows a positive growth story, giving it a high ChartMill Growth Rating of 9 out of 10. This score comes from outstanding past results and optimistic future estimates, which are important for a growth stock as past speed can point to a lasting business model and market edge.
- Very Strong Recent Growth: Over the last year, the company reported a 90.28% jump in Earnings Per Share (EPS) and a 59.24% rise in Revenue. This is not an isolated event; the five-year average yearly EPS growth is at a good 11.30%.
- Increasing Momentum: Study shows both EPS and Revenue growth rates are getting faster, meaning the speed of expansion is rising, a very good sign for growth investors.
- Positive Future Estimates: Possibly most key, analysts forecast strong forward movement, with EPS estimated to grow by 27.76% on average each year in the next few years.
This mix of excellent recent results and a good forecast forms a fundamental view of a company in a strong growth period. You can examine the complete details in the fundamental analysis report for CTRE.
Supporting Fundamentals: Profitability and Financial Health
While growth is the main focus, the screening method also looks for "acceptable profitability and health." This makes sure the growth is of good quality and the company is on a stable foundation, lowering the risk linked to pure, profitless expansion. CareTrust REIT scores well here also.
- High Profitability: The company gets a Profitability Rating of 8/10. It has industry-best margins, including an Operating Margin of 66.50% and a Profit Margin of 60.84%, doing better than most of its Diversified REITs peers. Good and improving margins suggest the company can effectively turn revenue into earnings.
- Sufficient Financial Health: With a Health Rating of 6/10, the company shows a varied but adequate situation. Its balance sheet strength is significant, with a low Debt/Equity ratio of 0.22 (better than 97.6% of the industry) and very good liquidity numbers (Current Ratio of 4.05). These aspects give the financial room to support future growth. A point to watch is a high dividend payout ratio, which management will need to manage with reinvestment requirements.
Positive Technical Setup
A strong fundamental story is most effective when it matches good price movement. The technical analysis for CTRE indicates the stock is in a good spot for a possible breakout, which is exactly what the combined screen looks for. The stock gets a top Technical Rating of 10/10 and a Setup Rating of 9/10.
- Clear Uptrend: Both the short-term and long-term trends are positive, a very strong basic signal. The stock is trading above all its main moving averages (20, 50, 100, and 200-day), which are all going up, a typical bullish alignment.
- Trading in a Range Near Highs: CTRE is currently trading near its 52-week high, showing strength. Lately, it has been moving within a range, which can gather energy for the next price move. The technical report notes lower volatility and a set resistance area just above the current price.
- Supporting Signs: The analysis also mentions recent accumulation patterns, like a Pocket Pivot signal, indicating knowledgeable buying interest. This kind of price and volume action can sometimes come before a breakout.
The coming together of a strong uptrend with a trading range at highs creates a technically interesting setup. For a more detailed view of the chart structure and important levels, see the technical analysis report for CTRE.
Valuation Context
For a growth stock, valuation is often viewed with attention to future potential. CTRE's Valuation Rating is a neutral 4/10. While its standard Price-to-Earnings ratio seems high, its forward P/E ratio is more moderate compared to the industry average. Most notably, its low PEG ratio, which includes earnings growth, implies the current price may be reasonable given its high expected growth rate. For growth investors, paying a higher price for speeding up, good-quality earnings can be a sensible strategy if the growth path continues.
Conclusion
CareTrust REIT presents a situation that fits the ideas of a combined growth and momentum strategy. The company shows very strong and speeding fundamental growth in both earnings and revenue, backed by high profitability and a stable enough financial position. Technically, the stock is in a clear uptrend and is trading in a range near highs, preparing for a possible new upward move. This connection between a strong business engine and positive market behavior is what screens like this aim to find.
This article is for informational purposes only and is not investment advice. All investments involve risk, including the potential loss of principal. Investors should conduct their own research and consider their individual financial circumstances before making any investment decisions. The screens and reports referenced are tools for analysis, not guarantees of future performance.
Interested in examining other stocks that match this combined growth and momentum profile? You can run the "Strong Growth Stocks with good Technical Setup Ratings" screen yourself to see current results here.
