Investors looking for notable capital appreciation frequently use a two-part method: joining solid basic business expansion with positive technical market timing. One way to spot these chances is to look for stocks displaying good fundamental growth, sound financial condition, and a technical chart formation indicating a possible upward move. This tactic tries to locate firms where quickening business speed might be close to being acknowledged by the wider market, possibly resulting in a time of continued price gains. Freshpet Inc (NASDAQ:FRPT) recently appeared from this kind of search, offering a case example in this growth-and-breakout system.
A Base of Solid Fundamental Growth
The central idea of growth investing is finding companies increasing their earnings and revenue at a pace much quicker than similar firms. Freshpet’s fundamental picture, as shown in its ChartMill Fundamental Analysis Report, shows it does well in this main requirement. The company gets a Growth Rating of 7 out of 10, supported by outstanding historical growth and good future projections.
- Rapid Past Results: In the last year, Freshpet’s Earnings Per Share (EPS) increased by a notable 196.63%, while revenue rose by 16.34%. More notably, the company has maintained an average yearly revenue growth of 31.72% over recent years, a clear sign of high demand for its fresh, refrigerated pet food.
- Good Future View: Analyst forecasts support ongoing speed, with expected average yearly EPS growth of 21.09% and revenue growth of 10.25% for the next years. This future growth is important, as it supports investor interest beyond past results.
- Aiding Profit and Condition: For a growth stock to last, it needs decent profit and a workable financial setup. Freshpet’s scores here are average but sufficient, with a Profitability score of 5 and a Financial Health score of 6. Important positives contain industry-leading profit and gross margins, and very good liquidity measures, giving the company the financial strength to support its growth plans.
The Technical Picture for a Possible Upward Move
While solid fundamentals give the "why" for an investment, technical analysis can help spot the "when" by studying price movement and market feeling. Freshpet’s ChartMill Technical Analysis Report gives it a solid rating of 7, with a specific Setup Rating of 7, showing a positive chart formation is active.
- Stabilization Within a Rebound: After a large drop from its 52-week peaks, FRPT has been forming a base and rebounding over recent months. The technical report states that the stock is now trading in the middle of its one-month range, having displayed less movement while prices stabilize.
- Matched Positive Directions: Both the near-term and long-term directions for FRPT are rated as positive, a good signal that the rebound speed may be increasing. The stock is trading above its important 20, 50, and 100-day simple moving averages, which often serve as changing support levels.
- Clear Risk and Barrier: The report points out a definite barrier area between $69.99 and $70.21, made by a mix of trendlines and moving averages. A clear move above this area could mark the next step upward and draw more buying interest. On the other hand, support is seen near $60.14, giving a reasonable level for a stop-loss order to handle risk, a key part of any breakout plan.
Price and Investment Points
The main caution for Freshpet, usual for high-growth stories, is its price. The fundamental report gives a Valuation Rating of only 3, stating that its Price-to-Earnings and Price-to-Forward-Earnings ratios are high, both compared to the wider market and its industry. However, the report also notes a low PEG ratio (which includes growth), implying the higher price may be partly reasonable due to the company’s outstanding growth path. For growth investors, paying more for better expansion rates is often part of the decision, though it does make the stock more reactive to any shortfall in future growth measures.
Summary
Freshpet Inc presents a strong picture for investors using a growth-with-breakout plan. The company shows the necessary fundamental element: confirmed, fast growth in both sales and earnings, with room for more. Technically, the stock is coming out of a time of stabilization with positive directions matched, creating the conditions for a possible move above a set barrier level. This mix tries to match a company’s internal business speed with a positive change in its external market view.
Interested in finding other stocks that match this growth-and-breakout picture? You can use the same search with our Strong Growth Stocks with Good Technical Setup Ratings tool to review more possible chances.
Disclaimer: This article is for information only and does not form financial advice, a suggestion, or an offer or request to buy or sell any securities. The information shown on Freshpet Inc (FRPT) is based on data and reports available at the time of writing and may become old. Investing in stocks includes risk, including the possible loss of principal. You should do your own complete research and think about talking with a qualified financial advisor before making any investment choices.
