Commvault Systems Inc (NASDAQ:CVLT) Fits Mark Minervini’s Trend-Following Strategy with Strong Technicals and Growth Momentum

Commvault Systems Inc (NASDAQ:CVLT) has become a possible choice for investors using Mark Minervini’s trend-following method, which blends technical strength with fundamental momentum. The strategy aims to find stocks in strong upward trends (Stage 2) with improving earnings and revenue growth, traits common in top-performing stocks. The stock was picked using a "High Growth Momentum + Trend Template" screen, ensuring it meets Minervini’s technical standards while also showing solid growth fundamentals.

Why CVLT Matches the Minervini Trend Template

Minervini’s method demands stocks meet strict technical conditions to confirm a lasting upward trend. CVLT meets these requirements:

• Price Above Key Moving Averages: The stock trades at $193.27, above its 50-day ($176.39), 150-day ($167.41), and 200-day ($166.25) moving averages. This alignment indicates a strong upward trend across short and long-term periods.
• Rising Moving Averages: The 50-day, 150-day, and 200-day MAs are all moving higher, confirming continued momentum.
• Close to 52-Week High: CVLT is trading within 2% of its 52-week high ($196.98), a sign of leading stocks.
• Relative Strength: With a ChartMill Relative Strength (CRS) score of 83.7, CVLT performs better than 84% of all stocks, a key measure Minervini uses to spot market leaders.

These technical features match Minervini’s belief that top performers come from strong foundations and maintain upward momentum with institutional backing.

High Growth Momentum Fundamentals

Beyond technicals, CVLT shows improving growth, a crucial factor for growth-focused investors:

• Earnings Growth:

  • Quarterly EPS growth (Q2Q) is 18.8%, with the prior quarter showing a stronger 30.4% rise.
  • Annual EPS growth (TTM) is 22.1%, reflecting steady profit gains.
  • The company has exceeded EPS estimates in all of the last four quarters, with an average surprise of 8.8%.

• Revenue Growth:

  • Quarterly revenue growth (Q2Q) is 25.5%, with the previous quarter at 23.2%.
  • Annual revenue growth (TTM) is 18.6%, showing rising demand for its data protection solutions.

• Profit Margins:

  • The latest quarter’s profit margin improved to 11.3%, up from 4.2% in the prior quarter, indicating better operational efficiency.

These fundamentals suggest CVLT is benefiting from strong demand in the cybersecurity and data management sector, with analysts raising next-year EPS estimates by 5.1% over the past three months.

Technical Analysis Summary

ChartMill’s technical report gives CVLT a rating of 8/10, noting its strong yearly performance (up 41.4% over 12 months) and recent move near 52-week highs. Key points:

• Support Levels: Important support zones are at $164.34 (weekly horizontal line) and $154.74 (weekly trendline), offering downside protection.
• Volume Confirmation: Recent volume increases during upward moves suggest institutional buying.
• Neutral Short-Term Trend: While the stock is extended, a pullback to support could provide a better entry point.

View the full technical report here.

Conclusion

CVLT fits the Minervini strategy’s key ideas: a technically strong stock with high relative strength, backed by improving earnings and revenue growth. While the current price is near highs, investors may watch for consolidation or a pullback to key support levels for potential entry opportunities.

For more stocks meeting these criteria, explore the High Growth Momentum + Trend Template screen.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Always conduct your own research or consult a financial advisor before making investment decisions.