Investors looking to join strict technical rules with an emphasis on fundamental growth frequently consider systematic methods. One method is the Mark Minervini system, which combines his specific Trend Template with a thorough study of earnings and sales momentum. The objective is to find stocks that are in strong, confirmed uptrends and also supported by improving business results. This two-step method tries to find leaders near the start of their large price gains by concentrating on force in both the stock's chart and the company's financial health.
A recent filter made to find such chances highlighted EDISON INTERNATIONAL (NYSE:EIX), a significant company in renewable energy and electric power distribution. The filter used Minervini's Trend Template to check technical condition, along with a High Growth Momentum (HGM) rating filter to verify the fundamental force. We will look at how EIX measures up to these strict requirements.
Checking the Technical Trend
The central part of the Minervini system is the Trend Template, a group of fixed technical rules that verify a stock is in a firm, lasting uptrend. EIX seems to pass these important checks:
- Price Above Key Averages: The stock's present price is above its rising 50-day, 150-day, and 200-day simple moving averages (SMAs). This shows positive momentum across different time periods.
- Moving Average Order: The 50-day SMA ($67.68) is above both the 150-day SMA ($60.45) and the 200-day SMA ($58.34), and the 150-day SMA is also above the 200-day. This pattern is a clear indicator of a solid Stage 2 uptrend.
- Nearness to Highs: EIX is trading within 25% of its 52-week high of $75.50, a rule that focuses on stocks showing leadership and momentum instead of those near their lows.
- Strong Relative Performance: With a ChartMill Relative Strength (CRS) score of 82.36, EIX is doing better than more than 82% of the market. Minervini notes that real market leaders regularly show high relative strength, as it points to institutional buying and better performance.
This technical picture is necessary for the system because it filters out stocks in resting or falling stages, making the investor concentrate only on stocks where the main trend is clearly upward. Trading in line with this confirmed trend raises the chance of a good outcome.
Checking Growth Momentum
While a strong chart is important, Minervini's SEPA (Specific Entry Point Analysis) system notes that the largest winners are nearly always supported by strong fundamental improvement. The filter's HGM rating checks several growth and quality measures, and EIX's latest financial reports show clear force:
- Earnings Improvement: The company has shown large earnings per share (EPS) growth. Year-over-year EPS growth for the past twelve months is about 33%. More notably, the latest quarterly EPS rose more than 77% compared to the same quarter last year.
- Positive Earnings Surprises: EIX has exceeded analyst EPS estimates in each of the past four quarters, with an average surprise above 12%. Regular positive surprises often lead to higher estimates and more institutional attention.
- Sales Growth: Sales growth is also present, with recent quarterly revenue growing by almost 31% year-over-year. This mix of growing sales and rising earnings indicates better operational efficiency and wider margins.
- Wider Profit Margins: The information shows a large sequential improvement in quarterly profit margins, further showing operational efficiency and pricing ability.
For an investor focused on growth, these are important signs. They shift the study away from a basic "low" valuation and instead focus on the speed of change in the business. Companies showing improving earnings and sales growth, especially when it beats expectations, often become the top performers in the market.
Technical Condition and Setup Overview
Beyond the specific Trend Template filters, ChartMill's own study gives a wider view of the stock's technical state. The total Technical Rating for EIX is a firm 8 out of 10, marking it as a stock in a confirmed uptrend. The report states that EIX has been one of the stronger performers over the past year, doing better than most stocks in its group and the wider market.
The Setup Quality rating is now a 6, meaning the stock is in a time of consolidation inside its larger uptrend. The study finds a main resistance area between $73.94 and $75.24, with support seen near $69.75. This kind of pause or pullback to support inside an uptrend is often where the next possible entry point may form, according to the Minervini method, as it allows for a clear risk level below support.
For a full look at the support and resistance levels, moving average order, and a possible trade setup, you can see the complete ChartMill Technical Analysis Report for EIX.
Final Points
EDISON INTERNATIONAL (EIX) offers a notable example for a system that joins technical and fundamental study. The stock meets the fixed technical requirements of the Minervini Trend Template, confirming it is in a long-term uptrend with better relative performance. Fundamentally, it shows the kind of large earnings growth, positive surprises, and wider margins that growth momentum investors look for. While the wider market trends are now negative, EIX's own force, as described by these rules, makes it a stock deserving of more examination for investors using this disciplined method.
This study comes from a specific filter for growth momentum stocks following a strict trend template. You can find more possible stocks that meet these specific rules by seeing the full filter results here.
Disclaimer: This article is for information and learning only. It is not a suggestion to buy or sell any security. All investing and trading has risk, including the possible loss of principal. Always do your own research and think about your financial position and risk tolerance before making any investment choices. The systems and filters discussed are based on past methods and do not promise future results.