In growth investing, joining a solid technical plan with detailed fundamental study can be an effective way to spot possible leading stocks. One organized method is to blend the ideas of Mark Minervini's Trend Template with an emphasis on strong-growth momentum. This two-part plan first confirms a stock is in a clear, strong uptrend, following specific rules for moving averages, relative strength, and nearness to highs, before adding tests for quickening earnings, sales, and better margins. The aim is to locate firms that are not only sound in pattern but also showing the fundamental strength that frequently drives continued price gains.
Fabrinet (NYSE:FN) recently appeared from a scan built on this exact approach, made to sort for stocks that meet Minervini's technical outline while also holding a firm High Growth Momentum (HGM) score.
Technical Fit with the Minervini Trend Template
The Minervini Trend Template is made to remove all but the firmest trending stocks, requiring discipline by overlooking any choice that misses even one of its main technical points. Fabrinet's present chart shows a clear fit with these rules.
- Moving Average Group: A key part of the template is the positive order of important moving averages. FN's price ($506.27) trades above its rising 50-day ($504.79), 150-day ($440.50), and 200-day ($403.67) simple moving averages. Also, the 50-day SMA is above the 150-day SMA, which is above the 200-day SMA. This grouped, rising order is a standard mark of a continued Stage 2 rise.
- Place Compared to 52-Week Range: The template looks for stocks showing force, not those near lows. FN's present price is about 241% above its 52-week low of $148.55, easily passing the "at least 30% above" point. At the same time, it is trading within 25% of its 52-week high of $632.99, showing it stays in a leading place rather than being stretched or falling behind.
- Better Relative Strength: Maybe most important is relative performance. FN holds a ChartMill Relative Strength (CRS) score of 95.55, meaning it has done better than over 95% of the market. Minervini states that real market leaders regularly show high relative strength, as it shows steady institutional buying.
This technical view indicates FN is in a clear uptrend with force, exactly the kind of setting the Trend Template is made to find for possible further advance.
Fundamental Driver for High Growth Momentum
While the Trend Template confirms a stock is in the correct "area" from a price view, the High Growth Momentum filter aims to verify that the core business has the driver to support more gains. Fabrinet's recent financial numbers show several positive points.
- Earnings Quickening: A main idea of growth investing is not just growth, but quickening growth. FN's quarterly earnings per share (EPS) growth has been rising in order: from +5.44% three quarters ago, to +9.96%, then +22.18%, and most lately reporting a firm +28.74% year-over-year rise in the last quarter. This sequence of quickening is a strong sign of improving business conditions.
- Firm Sales Growth: Top-line growth gives the base. The company's most recent quarterly revenue jumped 35.90% compared to the year-ago period, continuing a pattern of steady double-digit sales growth. Analysts are also positive on the future, having lifted their revenue guesses for the next year by 4.53% over the past three months.
- Profitability and Changes: Even with fast growth, the company has kept good and widening profit margins, with the last quarter's net margin reaching 9.94%. Also, analyst hope is seen in upward changes to next year's EPS guesses, which have grown by 2.85% in the last three months. Positive estimate changes often come before more institutional interest.
These fundamental items, quickening earnings on top of firm sales growth, solid margins, and rising analyst hopes, are the signs of a company with high-growth momentum, giving a fundamental reason for the stock's technical force.
Technical Condition and Position Review
Beyond the exact Trend Template points, a wider technical study of Fabrinet gives setting for its present stance. According to ChartMill's own report, FN has a firm Technical Rating of 8 out of 10, showing a sound overall trend shape. The long-term trend is rated as positive, while the short-term trend has lately changed to neutral, hinting at a time of pause within the larger uptrend.
This pause is seen in a Setup Rating of 6. The study notes that while the stock trades in the upper part of its 52-week range, it has been pausing in a fairly wide range over the past month and is presently trading near the lower end of that range. The report finds a key support area between $489.37 and $492.93, with resistance noted near $508.27. A clear move above this resistance could signal the restart of the upward trend.
For a full look at support, resistance, and automatic trade setup cases, you can see the complete Fabrinet Technical Analysis Report.
A Choice for More Study
Fabrinet shows a case where a detailed, rules-based scanning method has found a stock that fits both momentum-driven technical ideas and fundamental growth investing reason. Its chart shape meets the disciplined tests of the Minervini Trend Template, showing part in a continued uptrend. Supporting this price action are fundamental numbers showing quickening in earnings and sales, backing the idea of high-growth momentum.
Want to look at other stocks that presently fit this mix of technical force and high-growth fundamentals? You can run the same "High Growth Momentum + Trend Template" scan yourself to see a current list of possible choices: View the Scan Results.
Disclaimer: This article is for information and learning only. It is not meant as investment guidance, nor does it form a suggestion to buy, sell, or hold any security. The study is based on given data and described scanning methods, which have built-in limits. Investors should do their own full research, think about their personal money situation, and talk with a qualified financial advisor before making any investment choices. Please read our full disclaimer and terms of use for more information.