Investors looking to join strict technical rules with an emphasis on fundamental improvement frequently use approaches like the one made common by Mark Minervini. His method, called Specific Entry Point Analysis (SEPA), uses a step-by-step process to find stocks showing both firm price direction and quickening business results. The aim is to locate market front-runners near the start of their large price moves by using two checks: the Trend Template for technical condition and a group of rules for strong-growth momentum. This process tries to take part in stocks that are both in firm upward trends and supported by solid and getting better profits and sales.
FirstCash Holdings Inc (NASDAQ:FCFS) runs a big system of pawn shops and offers retail payment services at points of sale in the United States and Latin America. A recent filter joining Minervini's Trend Template with a High Growth Momentum (HGM) check found FCFS as a stock needing more study. We will look at why this stock seems to match the main ideas of this growth-and-momentum process.
Fitting the Minervini Trend Template
The Trend Template is made to check for stocks in a clear and firm Stage 2 upward trend, making sure an investor is moving with the current momentum. Using the given technical information, FCFS fits the important rules:
- Price Above Important Moving Averages: The present price trades much higher than the rising 50-day ($166.91), 150-day ($153.91), and 200-day ($148.14) simple moving averages. This order confirms a good trend across short, medium, and long-term periods.
- Moving Average Order: The 50-day moving average is higher than both the 150-day and 200-day averages, and the 150-day is higher than the 200-day. This step-by-step positive order is a key part of the Trend Template, showing steady buying and a clear upward trend.
- Nearness to Highs: The stock is trading within 4% of its 52-week high of $188.75, meeting the template's rule to be within 25% of the high. This shows firmness and little resistance above. At the same time, the present price is more than 65% higher than its 52-week low, showing major improvement and momentum.
- Better Relative Strength: With a ChartMill Relative Strength (CRS) score of 88.34, FCFS is doing better than almost 90% of all stocks in the market. High relative strength is a central part of the Minervini process, as it finds industry and market front-runners that often lead price increases.
This technical view suggests FCFS is in a sound, continuing upward trend with firm institutional backing, exactly the setting the SEPA process aims to use.
Fundamentals Backing High Growth Momentum
While the Trend Template makes sure a stock is technically sound, the High Growth Momentum (HGM) check tries to confirm that the price movement is backed by fundamental gain. FCFS's financial numbers show several good trends:
- Firm and Quickening Earnings: The company has reported steady, double-digit earnings growth. EPS growth on a trailing twelve-month (TTM) basis is solid at over 30%. More importantly, recent three-month growth has been notable, with the last reported quarter showing year-over-year growth of 24.5% and the quarter before growing at over 35%. This sequence of high growth is a key sign for momentum investors.
- Earnings Surprise Record: A clear strength is FCFS's history of going past analyst forecasts. The company has beaten EPS estimates in all of the last four quarters, with an average beat of almost 10%. Steady positive surprises often lead to upward changes and new buying from institutional investors.
- Growing Profitability: The company's profit margin in the most recent quarter was about 8.85%, showing a gain from the 7.20% margin in the quarter before. A growing margin points to operational efficiency and pricing ability, which can greatly help bottom-line growth.
- Sound Revenue Path: Revenue growth stays positive, with the latest quarter showing almost 20% year-over-year growth. This shows the company's main business is growing, giving a fundamental base for the stock's price increase.
These fundamental traits, quickening earnings, steady beats, and margin growth, are just what the HGM check tries to find, suggesting the stock's momentum is built on a base of true business performance.
Technical Condition and Setup Summary
The full technical analysis report for FCFS gives a detailed view of its market position. The stock gets a perfect ChartMill Technical Rating of 10 out of 10, showing notable firmness across all studied periods. The report states the long and short-term trends are both positive, and the stock is a top performer in its industry, doing better than 96% of its peers in Consumer Finance.
From a setup view, the report gives a Setup Rating of 6. It shows that after a firm rise, the stock is in a pullback or period of little change, which has lowered price movement. This action can make a possible "bull flag" shape, which may offer a future entry chance as the price moves through this time of rest. The analysis finds several clear support levels under the present price, which can help set risk management rules for any possible trade.
You can see the complete, detailed technical study in the ChartMill Technical Report for FCFS.
Locating Like Chances
The joining of Minervini's Trend Template and High Growth Momentum checks is a strong way to search the market for leading stocks. FCFS shows one result of this step-by-step search. Investors wanting to find other stocks that now fit this mix of technical and fundamental rules can run the filter themselves.
→ Click here to view the "High Growth Momentum + Trend Template" screen and see current results
Disclaimer: This article is for information and learning only. It is not a suggestion to buy or sell any security. The analysis uses given information and a specific filter process. Always do your own full study, think about your risk comfort, and talk with a qualified financial advisor before making any investment choices. Past results do not show future outcomes.
