For investors aiming to benefit from major price increases, a method that combines solid fundamental growth with positive technical patterns can be especially interesting. This method involves looking for companies with strong and quickening earnings and revenue growth, a sign of traditional growth stocks, while also displaying good financial condition and earnings to support that growth. The fundamental strength gives the reason for possible long-term profits. The technical part, mainly spotting breakout patterns or periods of stability near a price ceiling, tries to find the timing, looking for good points to enter as the stock gains speed to rise. This combined study tries to match a company's basic business path with positive market timing.
EXELIXIS INC (NASDAQ:EXEL) comes from such a search, showing a situation where good fundamental measures meet a positive technical arrangement. The Alameda, California-based cancer company, recognized for its main cancer treatment cabozantinib, seems to be forming a base for its next possible price movement.
Fundamental Strength: The Growth Driver
A close look at Exelixis's fundamentals shows a company performing well in several areas, which is important for any growth stock possibility. The company's fundamental analysis report gives it a good total score of 8 out of 10, with very high marks in Profitability (8) and Financial Condition (9). This pairing is a strong beginning, as it shows the company's growth is happening from a place of strength, not by accepting too much risk or using cash quickly.
The growth measures are convincing:
- Past Results: The company has produced notable past growth, with Earnings Per Share (EPS) rising 44.51% over the last year and Revenue increasing at an average yearly rate of 17.51% over recent years.
- Future Predictions: Experts forecast this speed to continue, with EPS predicted to grow at an average rate of 25.68% each year in the next few years.
- High Profitability: Exelixis works with large margins, including a Gross Margin of 96.63% and an Operating Margin of 35.85%, which are some of the highest in the competitive biotechnology field. Its Return on Invested Capital (ROIC) of 26.31% is much higher than its cost of capital, proving it is producing real value for shareholders.
- Very Strong Financial Position: A notable characteristic is the company's excellent financial condition, emphasized by having zero debt and a high Altman-Z score, giving it much room to pay for research, launch new products, and handle market changes.
Valuation and Technical Agreement
While growth and profitability are necessary, paying a fair price is also key for investment gains. Exelixis's valuation shows an interesting view. Although its individual Price-to-Earnings (P/E) ratio may look high to some, it is actually priced lower compared to its biotech industry competitors. More significantly, when its growth rate is considered through measures like the PEG ratio, the valuation seems more interesting, particularly with its high-quality profitability. This indicates the market may not be completely valuing the company's growth path, a possible chance for growth investors.
The technical view, as explained in the technical analysis report, supports this fundamental story by indicating a time of stability that might come before a new rise. The stock receives a good technical score of 7 and an even better setup score of 8.
- Positive Stability: After a large move several months ago, Exelixis has been changing hands in a set range between about $42 and $47 over the last month. This kind of stability after a rise can be a good break, letting the stock form a new base of support.
- Important Prices Active: The study finds clear support areas below the present price, especially around $43.20 and $40.60, made by a meeting of moving averages and trendlines. Directly above, resistance is viewed near the $45.40 price. A clear move above this resistance could show the restart of the longer-term positive direction.
- Total Direction Background: Importantly, the long-term direction for EXEL stays positive, and the stock is trading above its main rising moving averages (50-day, 100-day, and 200-day). This shows the wider speed is still upward, with the recent stability happening inside that setting.
Why This Pairing Is Significant
The connection between Exelixis's fundamental and technical views is what makes it notable for the explained method. The strong growth, high profitability, and debt-free financial position supply the fundamental support for continued stock price gains. These are the qualitative and quantitative situations, like a big target market in cancer and an experienced management team, that growth investors look for to make sure a company can achieve its long-term plan.
At the same time, the technical arrangement shows the stock is not stretched too high but is instead holding in a narrow range near resistance. For a growth investor, this formation can show a possible entry chance with a set risk view, as a breakout would confirm buyer agreement matching the positive fundamental story. It deals with the difficulty of timing an investment in a growth stock, trying to enter as the likelihood of an upward move grows.
Locating Comparable Chances
Exelixis shows how joining careful fundamental searching for growth, condition, and profitability with technical study for entry timing can find interesting candidates. Investors wanting to find other stocks that fit similar conditions of strong growth joined with encouraging technical arrangements can review the set search on ChartMill.
Disclaimer: This article is for information and learning only and does not form a suggestion to buy, sell, or keep any security. The study is based on data and reports given by other parties. Investing in stocks, particularly in the biotechnology field, includes significant risk, including the possible loss of the original investment. Investors should do their own complete research and think about their personal money situation and risk comfort before making any investment choices.
