For investors looking for a systematic way to find possible market leaders, a merged tactic that centers on earnings momentum, technical health, and good timing can be a useful instrument. This process usually includes searching for stocks that display solid recent and expected increases in earnings and sales, a sign of high-growth momentum, while also showing healthy price movements and trading in a formation that indicates a possible move higher is approaching. By stacking these fundamental and technical checks, the objective is to locate firms that are not only increasing quickly but are also set up technically for their upward move to continue.
CARETRUST REIT INC (NYSE:CTRE) recently appeared from such a multi-factor search, made to locate securities with a High Growth Momentum (HGM) Rating above 4, a Technical Rating above 7, and a Setup Rating above 7. This mix indicates CTRE may be a stock that merits more review by growth-focused investors.
High Growth Momentum Profile
The heart of a momentum tactic is in spotting speeding business fundamentals. CARETRUST REIT’s recent financial results show several signs that add to its HGM Rating of 6. The firm is showing notable growth, especially on a quarterly basis, which is a main part of the rating.
- Strong Quarterly EPS Growth: The company's earnings per share growth on a year-over-year quarterly basis has been very solid. The latest quarter showed growth of 66.7%, which comes after a remarkable 400% growth in the quarter before.
- Healthy Revenue Increase: This earnings growth is backed by vigorous top-line growth. Quarterly revenue growth has sped up in sequence, getting to 71.2% in the last reported quarter, up from 63.3% and 53.2% in the earlier periods.
- Annual Growth Path: Looking at the bigger picture, the trailing twelve-month (TTM) numbers confirm the story, with EPS growing more than 90% and revenue rising by almost 60% compared to the prior TTM period.
- Analyst Optimism: Future estimates also show positive momentum, with analysts raising their average revenue estimate for the next year by more than 6% in the last three months.
It is valuable to see that the rating also looks at areas where a company may not score fully. For example, CTRE's free cash flow has been negative, and its profit margin had a sequential drop in the last quarter. The HGM Rating of 6 brings together these strong growth factors with these softer areas, giving a complete view that still points positively because of the pure strength of the sales and earnings momentum.
Technical Health and Setup Condition
Good fundamentals are most effective when paired with a supportive price chart. According to the detailed technical report for CTRE, the stock gets a high Technical Rating of 9. This score shows very good technical condition across several timeframes.
- Healthy Relative Performance: CTRE is doing better than 90% of similar firms in the Diversified REITs industry and shows a steady pattern of increasing prices, having risen almost 37% over the past year.
- Favorable Trend Position: The long-term trend is rated as positive, and the stock is trading above all its important simple moving averages (20, 50, 100, and 200-day), showing wide bullish momentum.
- Trading Within a Band: Lately, the stock has been trading between $34.74 and $38.23. It is currently moving in the middle of this band, which has let it form a good-quality setup pattern, shown in its Setup Rating of 8.
This high Setup Rating is important for timing. It shows the stock is not stretched too far but is instead holding in a consolidation, forming a base of support. The technical review spots a clear resistance area between $36.85 and $37.77. A clear move above this area could point to a new move upward, giving a possible entry point with a set risk level, as support lies just below the current price.
A Merging Chance
For investors using a high-growth momentum tactic, CARETRUST REIT presents a situation where fundamental speeding up and technical preparation seem to be merging. The company’s striking quarterly earnings and sales growth give the fundamental "force" that momentum investors look for. At the same time, the stock’s high technical rating confirms large investor support and a current upward trend, while its high setup rating indicates the price action is tightening in a way that often comes before a big move.
This coming together is exactly what the merged search process tries to find: companies with the business momentum to draw investment and the chart formation that allows for planned entry.
Interested in reviewing other stocks that fit these conditions of high growth momentum and good technical setups? You can run the search yourself using this High Growth Momentum Breakout Setups Screen.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. The analysis is based on data provided and should not be the sole basis for an investment decision. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.
