Carvana Co. (NYSE:CVNA) Shows High Growth Momentum and Strong Technical Setup

The search for high-growth momentum stocks with favorable technical setups often leads investors to strategies that combine fundamental strength with chart patterns positioned for potential breakouts. By screening for securities with a ChartMill High Growth Momentum Rating above 4, a Technical Rating above 7, and a Setup Rating above 7, the goal is to identify companies showing strong earnings momentum that are also technically sound and forming positive consolidation patterns. This method aims to find stocks during times of improvement, both in their business results and their price movement.

High Growth Momentum Fundamentals

Carvana Co. (NYSE:CVNA) presents an interesting case for growth investors, earning a High Growth Momentum Rating of 7. This rating combines different parts of a company's earnings path, and Carvana's score is based on very good recent performance. The company has shown significant momentum in its main profitability measures, a primary factor the rating checks to find improving businesses.

• Explosive EPS Growth: The trailing twelve-month (TTM) EPS growth is at a notable 466%. Even more notable are the recent quarterly numbers, with the last quarter showing year-over-year EPS growth of 814%. This comes after previous quarters of 557% and 156% growth, pointing to a continued time of major earnings increase.
• Strong Revenue Expansion: Supporting the profit growth, revenue momentum remains firm. The TTM revenue growth is 39.5%, with the most recent quarter growing at 41.9%. Steady revenue beats, averaging over 4% above analyst predictions in the last four quarters, emphasize the company's capacity to surpass estimates.
• Positive Analyst Sentiment: The growth story seems to have believability on Wall Street. Analyst estimates for next year's EPS and revenue have been adjusted upwards by about 6% over the last three months, a good sign that experts are becoming more confident in the company's future.
• Cash Flow Generation: The company's free cash flow per share has increased by 203% over the past year, moving to a firm positive number. This gain is important as it shows better financial condition and the capacity to fund future growth internally.

These fundamental traits, high growth rates, improvement, and positive revisions, are exactly what the High Growth Momentum Rating is made to point out, making CVNA a notable candidate for investors using this strategy.

Technical Strength and Market Position

From a technical viewpoint, Carvana shows notable strength. The stock has earned a perfect ChartMill Technical Rating of 10, which evaluates the general condition of a stock's trend across different time periods. A complete analysis is available in the full technical report.

• Strong Uptrend: Both the long-term and short-term trends for CVNA are classified as positive. The stock is trading well above its important moving averages (20-day, 50-day, 100-day, and 200-day), all of which are increasing, confirming a firm bullish trend.
• Market Outperformance: CVNA is performing better than 94% of all stocks in the market over the past year and 93% of its peers in the Specialty Retail industry. This very good relative strength is a sign of market leadership.
• Consolidation within an Uptrend: After a major rally, the stock has started a time of consolidation over the past month, trading between about $349 and $397. This pause lets the stock absorb its gains and can create a foundation for the next possible move upward.

High-Quality Setup Pattern

The consolidation phase has led to a high ChartMill Setup Rating of 8. This rating measures the quality of a possible entry pattern, concentrating on factors that describe a lower-risk setup.

• The recent decrease in price volatility during the consolidation is a positive indicator, suggesting an equilibrium between buyers and sellers.
• A defined support zone has been found just below the current price, near $372.81, offering a reasonable level for a stop-loss order to control risk.
• The setup summary also mentions a recent "Pocket Pivot" signal, a volume-based indicator that implies buying by institutional investors, including more support for the positive pattern.

The mix of a perfect technical rating and a high setup rating indicates that CVNA is not only in a strong uptrend but is also presenting a clear possible entry point for traders.

Finding Similar Opportunities

The process that found Carvana Co. can be used regularly to find other possible high-growth momentum stocks with favorable technical setups. Investors wanting to see a current list of qualifying securities can review the results through this dedicated stock screen.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation to buy, sell, or hold any security, or an endorsement of any investment strategy. The information presented is based on data provided and should not be the sole basis for making an investment decision. Always conduct your own due diligence and consider consulting with a qualified financial advisor before making any investment.