Leonardo DRS Inc (NASDAQ:DRS) Shows Strong Growth and Technical Setup for Potential Breakout

For investors aiming for major price gains, a method that mixes solid core business progress with positive technical price formations can be an effective tactic. This method centers on finding firms displaying strong basic expansion, particularly in earnings and sales, while also showing stock price behavior that indicates a possible move out of a time of sideways movement. This two-part study tries to match a company's financial speed with market entry timing, looking for situations where better basics might be close to being seen and valued by the wider market.

One stock now meeting these filter conditions is Leonardo DRS Inc (NASDAQ:DRS). The firm supplies modern defense technologies, focusing on sensing, network computing, force protection, and electric power and propulsion systems for land, air, sea, space, and cyber domains.

Basic Growth Evaluation

The central idea of this tactic is to locate companies with clear and anticipated expansion, a main trait of traditional growth stocks. Leonardo DRS's basic picture, as shown in its basic analysis report, displays good force in this part, receiving a Growth Rating of 7 out of 10.

• Past Results: The company has produced notable historical expansion.
  • Earnings Per Share (EPS) expanded by 26.44% over the past year and has averaged 23.42% yearly growth over recent years.
  • Sales rose by 12.27% in the past year, with a high average yearly growth rate of 135.87% over the last several years, showing both internal growth and planned purchases.
• Future Outlook: Experts predict continued expansion, with EPS expected to rise by 12.13% each year in the next few years. Sales are also predicted to grow at a constant rate.

This good growth story is backed by acceptable scores in Profitability (6/10) and Financial Health (6/10), showing the growth is happening within a fairly steady operational and money structure. The company's Return on Invested Capital (ROIC) has been good in the past, and its debt amounts are workable, with a low Debt-to-Equity ratio.

Technical Picture for a Possible Move

While good basics give the "reason" for an investment, technical study helps find the "time." Leonardo DRS now shows a technical picture that indicates a time of sideways movement may be coming to an end. Based on its technical analysis report, the stock gets a high Setup Rating of 8 out of 10, even though its total technical rating stays low because of longer-term negative patterns.

• Sideways Movement Phase: The stock has been changing hands in a set span between about $32.43 and $34.99 over the last month, after a large drop from higher levels earlier. This narrowing span shows a balance between buying and selling force after the downward move.
• Main Barrier and Floor: The technical study notes a clear barrier area between $34.14 and $35.17. A maintained move above this area on greater trading volume could mark a move out and a possible change in short-term speed. On the other hand, a solid floor area exists just under the present price, near $33.99, giving a sensible point for a protective stop-loss order.
• Tactic Match: This picture is exactly what the filter method looks for: a stock with good basics that is technically "winding" or moving sideways. The lower movement within the span builds stored force for the next price move. For growth investors, a move above the barrier could show the market is starting to re-value the stock to mirror its good growth basics, offering a possible entry point matched with fresh positive speed.

Price Assessment and Market Setting

The stock's price assessment shows a varied view. Its Price-to-Earnings (P/E) ratio is high next to the wider S&P 500 but is viewed as fair next to similar firms in the Aerospace & Defense field, which often trades at higher multiples. The PEG ratio, which includes earnings growth, indicates the assessment is more reasonable when growth outlooks are weighed. This fits a growth investing view, where investors often take higher assessments today for faster earnings growth later.

Final Points

Leonardo DRS shows a situation where a filter for "Strong Growth Stocks with good Technical Setup Ratings" has found a possible meeting of factors. The company shows the number-based growth needs vital for growth investing, good historical and predicted EPS and sales growth. Technically, the stock is coming out of a downward move into a sideways movement phase with a set barrier level above. A clear move above this level could be read as a sign the stock's positive basics are getting fresh market notice.

Interested in looking at other stocks that fit this mixed growth and setup needs? You can see the full filter and its present findings here.

Disclaimer: This article is for information and learning only and is not a suggestion to buy, sell, or keep any security. The study is based on data and reports from ChartMill, and past results are no promise of future outcomes. Investing has risk, including the possible loss of the main amount. Always do your own full study and think about talking with a skilled money advisor before making any investment choices.