Investors aiming to benefit from large price gains frequently use a method that combines fundamental soundness with technical timing. One such tactic is to search for high growth stocks that are also showing encouraging technical breakout formations. This process tries to locate firms with good core business momentum, shown by quickening earnings and sales, while also finding times when the stock's price movement indicates a possible increase in its rising trend. The aim is to locate chances where fundamental growth possibilities are being confirmed, or maybe even predicted, by favorable market movement. Granite Construction Inc (NYSE:GVA) recently appeared from such a search, offering an example where its business growth matches a positive technical arrangement.
Fundamental Growth Picture
Central to this method is the search for firms growing quicker than similar companies. Granite Construction's fundamental report shows it matches this description, receiving a Growth Rating of 7 out of 10. The firm is showing forceful earnings momentum, a main factor for growth stock value.
- Strong Earnings Growth: The company's Earnings Per Share (EPS) rose by a notable 61.71% over the last year. More significant is its three-year average yearly EPS growth rate of 32.75%, which is considered very high.
- Firm Revenue Path: While sales growth has been steadier, revenue grew by 6.87% last year and is predicted to rise faster. Analysts forecast an average yearly revenue growth of 9.62% for the next years, pointing to predictions for increasing business.
- Future Predictions: The forward EPS is expected to grow by 22.48% each year, continuing a high-growth path. This future-focused growth is important, as growth investing is based on future potential.
These measures are key for the method because continued, high-level growth in earnings is what finally drives long-term stock price gains. A firm cannot be a genuine growth stock without showing this ability for increase. You can examine all the information in the Granite Construction Fundamental Analysis report.
Additional Financial Condition and Price Assessment
While growth is the main target, the search rules also need "acceptable profitability and condition" to remove financially weak firms. Granite Construction's scores of 5 in both Profitability and Financial Condition show a steady, though not outstanding, base.
- Profitability: The company is regularly profitable with positive operating cash flow. Its Return on Equity of 15.79% is firm compared to industry similar companies. Profit margins have displayed gain in recent years, a good direction for future earnings.
- Financial Condition: The company's balance sheet displays a workable debt level, with a Debt-to-Equity ratio of 0.84 matching its industry. Its Debt to Free Cash Flow ratio of 3.86 is viewed as acceptable, indicating it could reduce debt fairly fast with its present cash flow.
- Good Price Setting: Even with its growth, GVA seems fairly valued within its field. Its Price/Earnings ratio of 20.37 is lower than 83% of its Construction & Engineering industry similar companies, which trade at an average P/E of about 41. This mix of growth at a fair price can be attractive, as it indicates the market may not have completely valued the company's growth possibility.
Technical Breakout Arrangement
The second part of this method requires locating a positive technical entry moment. Granite Construction's technical analysis report is especially firm, with a top rating of 10/10 and a high Setup Rating of 8. This shows the stock's price movement is supporting the fundamental account.
- Forceful Trend Agreement: Both the near-term and long-term trends for GVA are rated as positive. The stock is trading above its important moving averages (20, 50, 100, and 200-day SMAs), which are all moving upward, a standard sign of continued positive momentum.
- Stabilization Close to Highs: The stock is presently trading near its 52-week high, having provided a 35.67% return over the past year. The technical summary states the price has been stabilizing in a range lately, with lower volatility, which can sometimes come before a new price movement.
- Defined Support and Resistance: The analysis finds a clear support area around $119.57 and a close resistance area just above $121.40. The "setup" indicates a possible trade entry if the stock can move above this resistance, with a close stop-loss set below the support level. This formation represents the "technical breakout" the search is made to find.
A firm technical arrangement is significant because it helps locate a moment of possible momentum start. It gives a structured plan for entry, aiming to join the next stage of a growth account that the fundamentals already support. For a more detailed view of the chart pattern, see the Granite Construction Technical Analysis report.
Summary
Granite Construction Inc offers a notable example for a joined growth and momentum method. Fundamentally, the company is achieving and is predicted to keep achieving firm double-digit earnings growth, which is the necessary driver for a growth stock. Technically, the stock is in a verified uptrend and is forming close to resistance, giving a specific point for evaluating a possible breakout. This agreement indicates the market may be in the stage of acknowledging the company's growth path. While the company's profitability and financial condition scores are moderate, they give a steady enough base to support the growth story without showing major warnings.
Interested in locating other stocks that match this description? The search that found Granite Construction is made to filter for similar chances. You can examine more "Strong Growth Stocks with good Technical Setup Ratings" by using the pre-set stock screener.
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Disclaimer: This article is for informational and educational purposes only and does not form investment advice, financial advice, or a suggestion to buy or sell any security. The analysis is based on data and reports given by other parties. Investing includes risk, including the possible loss of principal. You should do your own research and talk with a qualified financial advisor before making any investment decisions.
