Investors looking to join solid fundamental growth with well-timed technical entry points frequently use a multi-layered screening process. This process selects for companies with firm earnings momentum and sales speed,marks of the high-growth momentum style,while also displaying sound price trends and helpful chart patterns that indicate a possible breakout. By combining a high Growth Momentum Rating with strict Technical and Setup Quality Ratings, the method tries to find chances where strong fundamentals are meeting positive technical conditions.
FRANCO-NEVADA CORP (NYSE:FNV) appears from such a screen, presenting a strong case for this joined investment thesis. The company, a top gold-focused royalty and streaming firm, is currently displaying the sort of operational and financial momentum that growth investors look for.
High Growth Momentum Fundamentals
The center of the momentum case for Franco-Nevada rests in its excellent recent financial performance, which is measured by its High Growth Momentum Rating of 7. This score combines several important growth and momentum indicators into one metric.
- Strong Earnings Growth: The company's earnings per share (EPS) growth on a year-over-year (YoY) basis is notable. The latest quarter saw EPS rise by 94.7% compared to the same period last year. This comes after solid prior quarters with growth of 78.8% and 65.3%, showing a continued and quickening trend of profitability.
- Firm Sales Increase: This earnings growth is supported by solid revenue momentum. Quarterly sales growth YoY was a notable 86.1%, following good showings in earlier quarters. On a trailing twelve-month (TTM) basis, revenue has increased by over 63%.
- Positive Surprises and Revisions: Franco-Nevada has not only exceeded estimates but has done so reliably. It has reported positive EPS surprises in each of the past four quarters, with an average beat of 7.2%. Also, analysts have been raising their estimates, with the average EPS estimate for the next year increasing by over 19% in the past three months,a firm sign of belief in the short-term outlook.
- Margin Improvement: A main quality check for growth investors is growing profitability. The company's profit margin in the last reported quarter was about 61.6%, showing gain over the margin from the same quarter a year before and adding positively to the total momentum rating.
These items together validate the stock's high momentum score. For growth-focused methods like CANSLIM, such quickening in earnings and sales, along with positive analyst sentiment, are main filters for finding market leaders.
Technical Strength and Setup Quality
While firm fundamentals give the "why" for an investment, technical analysis can help with the "when." Franco-Nevada's technical profile is very strong, as explained in its full technical report.
- Top Technical Rating: The stock receives a first-class ChartMill Technical Rating of 10 out of 10. This rating shows outstanding technical condition across many timeframes. Both its long-term and short-term trends are rated as positive, and the stock is trading above all its important moving averages (20, 50, 100, and 200-day), which are all in a rising arrangement. Its relative strength performance puts it in front of about 81% of all stocks in the market.
- Helpful Setup Pattern: With a Setup Rating of 7, the chart indicates a consolidating pattern that may be getting ready for its next price move. The technical report notes lower volatility as prices have moved in a range over the recent period, forming a base of support. A clear support zone is found between $253.71 and $262.49, giving a sensible area for a stop-loss order. Significantly, the report states there is almost no resistance just above the present price, indicating a possible breakout might face little selling pressure.
- Market Context: This technical strength is happening within a positive wider market setting where the S&P 500's long-term trend stays positive. Franco-Nevada's agreement with this major market trend adds another piece of confirmation to its bullish technical position.
A Meeting Chance
For investors using a high-growth momentum method with attention on technical timing, Franco-Nevada shows a meeting of key standards. Its fundamental story is one of solid, quickening earnings and sales growth,exactly what the High Growth Momentum Rating is made to find. This fundamental strength is now matched with a technically excellent chart that shows both firm trend health and a consolidating setup pattern that gives a clear risk point.
This pairing tries to answer two critical investment questions: Is the company's growth path solid and lasting (answered by the momentum measures), and is the stock's price action in a positive position for a new entry (answered by the technical and setup ratings).
Interested in finding other stocks that fit this mix of high-growth fundamentals and bullish technical setups? You can run the screen yourself using this High Growth Momentum Breakout Setups Screen.
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Disclaimer: This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. The analysis is based on data provided and reflects conditions at a specific point in time. Investors should conduct their own due diligence and consider their individual financial situation and risk tolerance before making any investment decisions. Past performance is not indicative of future results.