EMCOR GROUP INC (NYSE:EME): A Strong Growth Stock with a Bullish Technical Setup

Investors seeking companies with strong growth trajectories often use a two-part method, combining detailed fundamental analysis with technical chart patterns. The strategy focuses on finding businesses that are not only increasing their earnings and revenue at a fast pace but are also showing financial health and profitability. This fundamental strength is then matched with a positive technical setup, like a breakout from a consolidation pattern, which can indicate a possible continuation of an upward price trend. This method tries to find stocks that are fundamentally healthy and are at the same time gaining positive momentum in the market.

EMCOR GROUP INC (NYSE:EME) presents a strong example of this investment method. The company, a leading provider of electrical and mechanical construction and facilities services, has shown a solid operational and financial performance that matches the main ideas of growth investing.

Fundamental Strength: The Engine for Growth

A detailed look into EMCOR's fundamentals shows a company performing very well. Its fundamental analysis report gives it an overall score of 8 out of 10, pointing out very good performance in several important areas for a growth stock.

• Strong Profitability: EME gets a high Profitability score of 9. Key metrics show this strength:
  • Return on Equity (ROE): 36.22%, doing better than 90% of similar companies in the Construction & Engineering industry.
  • Return on Invested Capital (ROIC): 27.02%, much higher than its cost of capital, showing efficient use of investor money.
  • Profit Margin: At 7.07%, the company's margins are not only good but have been increasing steadily over recent years.
• Very Good Financial Health: With a Health score of 9, EME shows a strong balance sheet.
  • The company has a very low Debt-to-Equity ratio of 0.08, showing little dependence on debt financing.
  • Its Altman-Z score of 6.59 points to a very low chance of financial trouble.
• Good and Continued Growth: EME's Growth score of 7 is backed by notable historical and expected expansion.
  • Earnings Per Share (EPS) grew by 38.03% over the past year, with a 5-year average growth rate of more than 30%.
  • Revenue went up by 13.77% in the last year and is predicted to keep growing at almost 10% each year.

This fundamental picture is exactly what growth investors look for: a very profitable company with a clean balance sheet, set to benefit from its growing market.

Technical Breakout: Confirming Market Momentum

While strong fundamentals provide the base, technical analysis helps find the best time for an investment. EMCOR's technical analysis report gives a top score of 10, reflecting very good price momentum across different time periods.

• Positive Trend Alignment: Both the short-term and long-term trends for EME are positive, an important sign of continued bullish sentiment. The stock is trading well above its key moving averages (20-day, 50-day, 100-day, and 200-day), which are all moving upward.
• Good Relative Performance: EME has done better than 86% of all stocks in the market over the past year and is trading near its 52-week high, showing notable strength compared to the wider market.
• Consolidation and Breakout Possibility: The stock has been moving within a set range over the past month. Recently, a "Pocket Pivot" signal was seen, pointing to accumulation by investors. This pattern often comes before a breakout above resistance levels, suggesting the possibility for the next upward move in the price trend.

The pairing of a strong fundamental base with a good technical chart pattern lowers investment uncertainty. The technical breakout pattern indicates that the market is starting to acknowledge and price in the company's fundamental strengths.

A Strategy in Action

The standards used to find EME are not random. Strong profitability ensures the company can pay for its own growth, while very good financial health provides stability during economic slowdowns. The notable growth rates are the exact description of a growth stock. When these fundamental qualities are supported by a positive technical setup, it raises the chance that the stock's upward path can continue. EME's current setup, trading in a consolidation area after a notable price increase, offers a possible entry point for investors who think the company's growth story is not finished.

For investors interested in finding other companies that meet similar standards of strong growth, solid fundamentals, and positive technical patterns, more research can be done using this Strong Growth Stocks with good Technical Setup Ratings screen.

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. All investments involve risk, including the possible loss of principal. Always conduct your own research and consider your individual financial circumstances before making any investment decisions.