Investors aiming to benefit from the next group of market-leading companies frequently use a two-part method, joining the prospective character of fundamental analysis with the timing indicators given by technical analysis. One specific tactic includes filtering for solid growth stocks that are also showing encouraging technical breakout formations. The idea is simple: find companies with strong and speeding business basics, such as sales growth, rising profitability, and firm financial condition, and then search for times when their stock price movement indicates a possible change in momentum, moving out of a period of sideways trading. This technique tries to combine the lasting possibility of a high-caliber business with a positive near-term starting place, as indicated by the chart.
DexCom Inc (NASDAQ:DXCM) functions where healthcare and technology meet as a top company in continuous glucose monitoring (CGM) systems. The company's products, for example the Dexcom G7, are important tools for diabetes management, a big and increasing worldwide health market. This places DexCom directly in the kind of wide target market with lasting growth possibility that growth investors look for.
Fundamental Strength: The Engine for Growth
A close look at DexCom's financials shows a company performing very well from a fundamental viewpoint. According to its fundamental analysis report, DexCom receives an overall rating of 7 out of 10, with especially high marks in Growth (8), Profitability (9), and Financial Health (7). These are the central supports for any lasting growth narrative.
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Strong Growth Path: The company shows forceful, steady enlargement. Over the last few years, Revenue has increased at an average yearly speed of more than 22%, with the latest year showing a 14% rise. More notably, Earnings Per Share (EPS) has risen at an average speed of almost 30% each year. Looking forward, analysts anticipate this solid speed to persist, with expected future EPS growth forecast above 22%.
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High Profitability and Efficiency: Growth is not happening by sacrificing profits. DexCom displays very good margins and returns on capital:
- Profit Margin: 15.96%, doing better than over 92% of its industry counterparts.
- Return on Equity (ROE): 26.44%, putting it in the best group of the Health Care Equipment sector.
- Return on Invested Capital (ROIC): 15.72%, much higher than its cost of capital, showing it is producing real shareholder value.
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Firm Financial Base: With a Debt/Equity ratio of 0.47 and a solid Altman-Z score, the company’s balance sheet indicates no symptoms of trouble. Its capacity to produce strong cash flow easily maintains its operations and growth spending. This financial condition is key, as it gives the steadiness required to handle market changes and put money into future new ideas without too much dependence on debt.
Technical Setup: A Pattern of Possible Turnaround
While the lasting fundamental view is strong, the stock's price movement has faced pressure over the last year, trailing the wider market. However, the recent technical picture indicates a possible turning point. The technical analysis report mentions a low overall rating of 2, mirroring this poor past performance, but points out a more hopeful Setup Rating of 7.
The main point is a shift in trend behavior. The lasting trend is still negative, but the near-term trend has become positive. The stock is now trading sideways inside a set area, displaying lower volatility, a typical sign before a big move. This sideways action is happening just under a clear resistance area between $66.47 and $68.94, made by a combination of moving averages and trendlines.
A clear move above this resistance area on good volume could indicate that the selling force has ended and that buyers are taking back command, possibly marking the start of a new upward phase. The report finds a close support area near $65.90, which could act as a sensible guide for handling near-term risk.
Why the Pairing is Strong
The filtering tactic that found DexCom is effective because it brings together two key aspects. The fundamental rules make sure the company is not a failing business but a successful one with a tested model for growth and profit, the basic reason for any lasting investment. The technical setup rules then tackle the timing, looking for signs that market feeling may be matching the fundamental facts after a time of doubt or sideways movement.
In DexCom's situation, the gap is evident: the business is growing earnings at a fast speed and is very profitable, yet the stock price has been in a decline. The forming technical setup suggests this gap may be beginning to close. For a growth investor, this shows a situation where a high-quality asset could be obtained before a possible technical trigger, a breakout, gains the wider market's notice.
Finding More Possibilities
DexCom shows the kind of possibility a joined fundamental and technical filter can reveal. For investors wanting to use this approach to locate other possible choices, the set "Strong Growth Stock Technical Setups" screen methodically searches for this exact mix of qualities.
Disclaimer: This article is for information only and is not financial advice, a suggestion, or an offer to buy or sell any securities. Investing has risk, including the possible loss of the original amount invested. You should do your own investigation and talk with a qualified financial advisor before making any investment choices.
