For investors aiming to benefit from market momentum, a method that joins solid basic business expansion with good technical price behavior can be especially interesting. This method tries to find companies that are not only increasing their earnings and sales at a better-than-normal speed but are also near a possible price rise, as indicated by their stock charts. By selecting for stocks with good basic growth, acceptable financial condition and earnings, and an encouraging technical arrangement, the method tries to match the momentum of the business with the momentum of the stock price. One company that recently appeared from such a search is Freshpet Inc (NASDAQ:FRPT).
A Look at the Growth Profile
Fundamentally, this method focuses on companies showing notable and lasting growth, a main force for long-term stock gains. Freshpet’s basic report shows it meets this standard adequately, receiving a good Growth Rating of 7 out of 10. The company’s recent results emphasize its expansion path:
- High EPS Growth: Over the past year, Freshpet’s Earnings Per Share rose by a notable 196.63%, a clear sign of better bottom-line performance.
- Good Revenue Momentum: Revenue growth has been steady, rising by 16.34% in the last year and averaging a yearly growth rate of 31.72% over recent years.
- Positive Future Outlook: Analysts think this growth will persist, with estimated average yearly EPS growth of 21.09% and revenue growth of 10.25% in the next years.
This growth story is key to the investment idea. Companies that can reliably grow earnings at a high rate frequently gain investor focus and can see their stock prices move up over time. For a complete look at these measures, you can examine the full Freshpet Fundamental Analysis Report.
Assessing Financial Foundation and Valuation
While growth is most important, the method also needs a company to have a steady enough financial base to maintain its expansion and produce earnings from it. Freshpet’s basics show a varied but generally acceptable view:
- Profitability: The company gets a Profitability Rating of 5. Its profit margin of 11.44% places in the better part of its industry, and its return on equity is acceptable. However, its record of earnings has been variable, with losses in some of the past five years.
- Financial Health: With a Health Rating of 6, Freshpet displays soundness in liquidity, having very good current and quick ratios that are much higher than industry norms. This indicates it has sufficient means to handle near-term needs. Its debt amounts are acceptable, though its return on invested capital is now below its cost of capital.
- Valuation Context: The Valuation Rating is a middle 4. The stock sells at a higher price based on forward earnings guesses, which is typical for high-growth companies. However, this is partly supported by its growth speed, as shown by a low PEG ratio, which indicates the stock could be fairly valued when growth is considered.
The Technical Setup for a Possible Breakout
The last part of the method involves finding an encouraging technical formation that indicates gathering buying interest and a possible upward move. Freshpet’s technical study shows a stock that is trying to change from a longer-term decline.
- Trend Change Happening: The long-term trend for FRPT is still down, but notably, the short-term trend has become up. This difference often means that selling interest could be reducing and buyers are starting to act at lower price points.
- Consolidation and a Bull Flag: The technical report states that FRPT is now forming a bull flag formation. This formation usually appears after a fast price gain, followed by a small, downward-moving consolidation. It is often seen as a halt before the earlier upward trend continues.
- Important Price Points: The stock is meeting close resistance in an area between $63.57 and $64.65. A clear move above this zone could mark the next upward phase and confirm the positive setup. On the other hand, support sits near $62.59, giving a possible risk control point for traders.
This technical picture is exactly what the search process looks for: a stock with sound basics that is also showing helpful price behavior, suggesting it could be getting ready for its next upward move. For a graphic and detailed view of these chart patterns, see the Freshpet Technical Analysis Report.
Conclusion
Freshpet Inc shows an example of the meeting of basic growth and technical chance. The company works in the stable pet care field and is reporting notable revenue and earnings growth, supported by analyst forecasts for ongoing expansion. While its valuation shows its growth position and its earnings history has variations, its sound liquidity gives a solid operating base. Technically, the stock seems to be forming a bottom, with a developing bull flag formation and a positive short-term trend pointing to a possible rise from its longer-term drop.
This pairing—a basically growing company displaying signs of technical activity—makes FRPT a stock deserving of more study for investors using a growth-with-momentum method.
Find More Possible Candidates The process used to find Freshpet can be used to find other stocks with similar traits. If you want to search for more sound growth stocks showing encouraging technical setups, you can investigate the set search here.
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 includes risk, including the possible loss of principal. You should do your own study and talk with a certified financial advisor before making any investment choices.
