Investors looking to join strict technical rules with a focus on fundamental growth often consider methods like the one created by Mark Minervini. His system, called Specific Entry Point Analysis (SEPA), methodically finds market leaders by requiring strength on two sides. First, a stock must show a clear and confirmed uptrend, as set by his defined Trend Template rules. Second, it must have good and improving fundamentals, especially in earnings and sales growth. This two-step method tries to find stocks that are not only rising in price, but are doing so because of real company strength, setting them up for possible continued good performance.
The Ensign Group Inc (NASDAQ:ENSG) stands as a present example that seems to meet both the technical and growth parts of this strict system.
Meeting the Minervini Trend Template
The main part of Minervini's technical method is his Trend Template, a list made to find stocks in a clear Stage 2 advance. ENSG's present chart and numbers match these rules well, which are important for making sure a trader is following the current momentum and not trying to buy a stock in decline.
A look at the main rules shows a strong picture:
- Price vs. Moving Averages: The stock price ($207.30) trades well above its rising 50-day ($189.46), 150-day ($179.37), and 200-day ($171.49) simple moving averages. This order shows continued buying across short, medium, and long-term periods.
- Moving Average Order: The 50-day MA is above both the 150-day and 200-day MAs, and the 150-day MA is above the 200-day MA. This positive order confirms the uptrend is sound and momentum is increasing.
- Nearness to Highs: ENSG's price is about 75% above its 52-week low of $118.73, showing major recovery and strength. Also, it is trading within 5% of its 52-week high of $218.00, a sign of market leadership as Minervini's system looks for stocks near new highs, not those near lows.
- Relative Strength: With a ChartMill Relative Strength (CRS) score of 89.24, ENSG is doing better than almost 90% of the whole market. High relative strength is a required part of the system, finding stocks that are leading the market higher.
Qualifying as a High-Growth Candidate
While the Trend Template makes sure a stock is in a good technical state, the High Growth Momentum (HGM) rating works to check the fundamental cause for that price movement. For Minervini, "big earnings attract big attention," and ENSG's financial numbers point to a company in a solid growth period.
- Earnings Growth Improvement: The company shows a pattern of improving earnings per share (EPS) growth on a quarterly, year-over-year basis. The latest quarter saw EPS grow 22.1%, after earlier quarters of 18.0% and 20.5%. This step-by-step improvement is a main sign of building fundamental momentum.
- Strong Annual Growth: Over the last reported fiscal year, EPS grew 19.5%, following good growth of 15.3% the year before. This steady double-digit increase gives a solid base.
- Revenue Growth: Top-line growth is also good, with revenue rising 20.2% in the last quarter and 18.7% over the trailing twelve months. Strong sales growth confirms that earnings gains are from business growth.
- Analyst View: The market's forward-looking view seems positive, with analysts raising their average earnings estimate for the next year by almost 1% over the last three months. Such upward changes often come before continued institutional interest.
Technical Health and Setup Summary
Beyond the specific Trend Template rules, ENSG's overall technical health is good. ChartMill's own Technical Rating gives the stock a top score of 10 out of 10, showing notable strength across many time periods and measures. The long-term and short-term trends are both seen as positive, and the stock is a leader in its Health Care Providers & Services industry.
The technical study also notes a fair Setup Rating of 7. The report states the stock is in a pullback within its recent range, which has lowered volatility and may be forming a consolidation area. This kind of action can sometimes create a more clear, lower-risk entry point for traders following the Minervini method, who often look for entries after a volatility decrease. A recent "Pocket Pivot" signal, a volume-based sign of accumulation, adds another positive technical note.
For a detailed look at the support and resistance levels, trend study, and a sample trade setup, readers can see the full ChartMill Technical Report for ENSG.
A Candidate for Further Analysis
The Ensign Group presents a case where clear technical momentum, as defined by a strict trend-following template, happens at the same time as improving fundamental growth in earnings and sales. This combination is exactly what systems like Minervini's SEPA method try to find. For investors focused on high-growth momentum, ENSG deserves more study to see if its present consolidation leads to the next part of its trend.
Looking to find more stocks that meet this mix of clear trends and high growth? You can use the same screen with the High Growth Momentum + Trend Template screener on ChartMill.
Disclaimer: This article is for informational and educational purposes only. It is not a recommendation to buy or sell any security. The analysis is based on current data and a specific investment methodology. All investing involves risk, including the potential loss of principal. Always conduct your own due diligence and consider consulting with a qualified financial advisor before making any investment decisions.
