Carvana Co. (NYSE:CVNA) Fits the Minervini Trend Template with High Growth Momentum

The method used to find possible investment choices joins a strict technical structure with attention to fundamental growth speed. This method is influenced by the tactics of famous trader Mark Minervini, who stresses the need to trade aligned with a stock's main direction. The central technical filter is the Minervini Trend Template, a group of rules made to find stocks in strong, continuing upward trends. This is combined with a search for high growth momentum (HGM), which looks for firms showing outstanding and frequently speeding growth in important financial measures like earnings and sales. The aim is to locate securities where solid price movement is backed by fundamental business health, forming a possible combined effect for notable price gains.

A Standard Trend Template Example

Carvana Co. (NYSE:CVNA) offers a clear example of a stock fitting the strict technical needs of the Minervini Trend Template. This template is important because it sorts for stocks already in a verified Stage 2 upward move, steering clear of the problems of trying to buy a declining stock or purchase into poor, consolidating patterns.

An examination of CVNA's chart and main measures shows a very close fit with the template's rules:

• Price Above Important Moving Averages: The present price trades significantly above the rising 50-day, 150-day, and 200-day simple moving averages (SMAs). This arrangement verifies a united positive trend across short, medium, and long-term periods.
• Correct Moving Average Order: The 50-day SMA ($353.98) is above both the 150-day SMA ($347.39) and the 200-day SMA ($313.34), and the 150-day SMA is also above the 200-day SMA. This step-by-step order is a standard indicator of building momentum.
• Nearness to Highs: The stock is trading within 6% of its 52-week high of $485.33, meeting the template's rule to be within 25% of the high. It also sits more than 200% above its 52-week low, showing a strong recovery trend.
• Better Relative Strength: With a ChartMill Relative Strength (CRS) score of 93.61, CVNA is doing better than almost 94% of all stocks. High relative strength is a fundamental part of the Minervini method, spotting market leaders that often lead upward moves and withstand declines more efficiently.

The Fundamental Driver: High Growth Momentum

While the trend template shows how a stock is moving, the High Growth Momentum rating aims to understand why. For a stock's rise to be lasting, it should preferably be driven by solid and getting better business basics. CVNA's recent financial results indicate such a driver is operating.

The firm has shown very fast growth and a notable recovery in profitability:

• Earnings Speed Increase: The year-over-year earnings growth is very high, with the latest quarter showing a 60.9% rise. Even more notable is the speed increase seen in earlier quarters, with growth rates of 814% and 556% in the two quarters before that. This sequence of high, and in some times quickening, earnings growth is a main quality looked for by growth investors.
• Steady Revenue Growth: Top-line growth remains solid, with the last quarter's revenue up 54.5% year-over-year. The company has exceeded revenue forecasts in each of the last four quarters, with an average beat of 5.4%, showing continued business speed that surpasses market predictions.
• Route to Profitability: After large losses, CVNA has moved clearly into profitability. The trailing twelve-month (TTM) EPS is $4.38, and the profit margin in the last reported quarter was 2.67%. Analysts are growing more positive, shown by higher adjustments to both next-year earnings (+7.9%) and revenue (+5.9%) forecasts over the past three months.

Technical Condition and Present Situation

According to ChartMill's own analysis, CVNA is in very good technical condition, receiving a top score of 10 out of 10. The report states that both short-term and long-term trends are positive, volume has grown on the recent upward move, and the stock is a definite leader in its Specialty Retail industry.

However, the analysis also gives a warning note important for entry timing. The stock's Setup Quality rating is now a 3, meaning that after a strong price jump, the stock may be stretched in the short term. The report proposes that while the technical base is very good, "it does not present a decent entry opportunity at the moment. Price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first." This points out the difference between finding a strong stock and finding a best, low-risk entry point, a main principle of careful trading.

For a complete look at support levels, volume study, and other technical items, you can see the full ChartMill Technical Report for CVNA.

Locating Comparable Chances

Carvana shows the kind of choice that appears when looking for stocks with both strong trends and fundamental growth triggers. This pairing can be a strong force for returns. Investors wanting to use this dual-purpose screening method to find other possible ideas can look at the High Growth Momentum + Trend Template screen on ChartMill.

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Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. The analysis is based on data and methodologies believed to be reliable, but no guarantee is made as to its accuracy or completeness. Investors should conduct their own research and consider their individual financial situation and risk tolerance before making any investment decisions. Past performance is not indicative of future results.