In growth investing, mixing a strict technical plan with attention to fundamental momentum can be a strong method. The system used here comes from the ideas of Mark Minervini's SEPA (Specific Entry Point Analysis) plan, which tries to find stocks showing both firm price patterns and quickening business results. This is put into practice using a two-step screen: first, using the Minervini Trend Template to sort for stocks in clear, strong uptrends; second, adding a High Growth Momentum (HGM) score to confirm the basic company is showing the earnings and sales speed that usually supports continued price gains. This two-part method tries to locate investments where chart strength is supported by fundamental force.
EXACT SCIENCES CORP (NASDAQ:EXAS) appears as a pick from this screening method, offering an example in how a stock can fit both the strict chart rules of a trend system and the growth investor's look for business speed.
Fit with the Minervini Trend Template
The Minervini Trend Template is made to remove distraction and find stocks in a confirmed Stage 2 rise, marked by particular arrangements in moving averages and price movement. A check of EXAS shows it satisfies these strict chart rules, which are important for the plan as they help confirm one is trading with the main, large-scale momentum.
- Moving Average Arrangement: The stock's price is trading above all main moving averages (50-day, 150-day, and 200-day). Importantly, these averages are in the correct bullish order: the 50-day SMA ($102.50) is above the 150-day SMA ($77.09), which is itself above the climbing 200-day SMA ($71.24). This layered, upward-slanting arrangement is a classic sign of a sound long-term uptrend.
- Nearness to Highs: A central idea of the trend template is to concentrate on strength, not searching for low prices. EXAS is now trading within 0.3% of its 52-week high of $103.67, easily inside the "within 25% of the high" rule. At the same time, the stock is about 166% above its 52-week low, well beyond the "at least 30% above the low" requirement. This shows strong recovery and momentum.
- Better Relative Strength: The stock has a ChartMill Relative Strength (CRS) score of 93.45, meaning it has done better than over 93% of the market. High relative strength is a required part of the Minervini method, as it finds market leaders, stocks that are the first to climb and often climb the most during bullish periods.
Fundamentals for High Growth Momentum
While the trend template sets up the "how" of the price move, the High Growth Momentum score tries to answer the "why." For a trend to last, it should be driven by getting better fundamentals. EXAS shows several measures that fit a high-growth picture, giving a fundamental reason for its chart breakout.
- Strong Earnings Growth: The company is showing sharp gain in profitability. Earnings Per Share growth on a trailing twelve-month (TTM) basis is up 81.5%. More notably, recent three-month speed is even stronger, with the last reported quarter showing year-over-year EPS growth of 91.9%. This pattern of quickening is a main sign for growth investors.
- Firm and Quickening Sales: Revenue growth stays firm, with the last quarter posting a 23.1% year-over-year increase. This follows a pattern of steady sales growth, supporting the top-line increase needed for long-term value creation. The company has also exceeded revenue guesses in three of the last four quarters.
- Cash Flow Creation: A notable positive sign is the shift in free cash flow. The Free Cash Flow per Share (TTM) has grown by over 1140% compared to the year before, moving into positive area. This getting better cash creation is needed for paying for future growth projects without too much share increase or debt.
Chart Condition and Formation
Beyond the basic trend template filters, a closer look at the chart details shows a stock in a leading position. The long-term trend is positive, and the short-term trend is also positive, a mix that suggests steady buying pressure. The stock has traded in a narrow band lately between $102.13 and $103.67, which can be seen as a pause or a volatility squeeze pattern after a major prior climb. Such pauses within a firm uptrend often come before the next step up.
ChartMill's own study gives EXAS a high Technical Rating of 9 out of 10, showing its better chart condition across several time frames. The Setup Rating is 7, showing the recent pause has made a possible entry formation. The study finds close resistance just above the present price near $103.43-$103.45, with support levels below. A clear move above this resistance area could be seen as a breakout from the recent pause.
For a full look at the support/resistance levels and a particular trade formation study, you can see the complete ChartMill Technical Report for EXAS.
Locating Like Possibilities
EXACT SCIENCES CORP shows the kind of investment that passes through a filter looking for Minervini-style trend strength paired with high-growth fundamentals. For investors wanting to search for like possibilities that meet these mixed needs of technical trend template fit and high growth momentum, the ready-made screen is available to use: High Growth Momentum + Trend Template Screen.
Disclaimer: This article is for information and learning only. It is not a suggestion to buy or sell any investment. The study is based on given data and certain screening methods. Investors should do their own complete research, think about their personal risk comfort, and talk with a qualified financial advisor before making any investment choices. Past results are not a guide for future results.