Hippo Holdings Inc (NYSE:HIPO) has appeared as an interesting option for investors using systematic growth strategies, particularly those using methods like Mark Minervini's SEPA approach. This method joins careful technical study with fundamental growth filters to find stocks showing both good price momentum and improving business foundations. The selection method centers on companies showing better relative strength, clear chart formations, and signs of operational betterment through earnings and sales improvement.
Technical Strength and Trend Compliance
Hippo Holdings shows a very good technical picture that fits well with Minervini's Trend Template needs. The stock currently trades at $36.88, placing it well above all main moving averages including the 50-day ($34.96), 150-day ($28.77), and 200-day ($28.58) simple moving averages. More importantly, these moving averages are all moving upward and correctly ordered with the 50-day above both the 150-day and 200-day averages, confirming the stock is in a confirmed Stage 2 advance.
The stock's place relative to its 52-week range further supports its technical strength. Currently trading 101% above its 52-week low of $18.56 and within 6% of its 52-week high of $38.98, HIPO meets the important Trend Template condition of being at least 30% above its low while staying within 25% of new highs. This pairing indicates the stock has noteworthy momentum while still having space for more gain.
Exceptional Relative Strength and Market Leadership
A key part of the Minervini method is finding stocks showing better relative strength, and HIPO does very well in this area with a ChartMill Relative Strength reading of 94.16. This shows the stock has done better than 94% of all stocks in the market over the past year. Within the insurance industry specifically, HIPO ranks even higher, doing better than 97% of its 147 industry peers.
This level of relative strength is especially important because Minervini's research indicates that stocks with RS ratings above 70, and preferably in the 80s or 90s, are often the market leaders most likely to give strong returns. The steadiness of HIPO's better performance across multiple time periods—with gains of 101% over the past year, 52% over six months, and 37% over three months—shows continued institutional interest and momentum.
Fundamental Growth Acceleration
Beyond technical strength, Hippo Holdings shows the fundamental improvement that growth investors want. The company has shown notable betterment in its earnings path, with several main measures showing important upward momentum:
- EPS growth on a trailing twelve-month basis has improved to 88.4%
- Quarterly EPS growth has increased to 103% in the most recent quarter
- Analyst expectations for next quarter's EPS have been moved upward by 396.9%
- Full-year EPS growth reached 82.1% in the most recent fiscal year
Sales growth tells a similarly interesting story, with TTM sales growth of 43% and steady quarterly growth averaging about 46% over recent quarters. This pairing of improving earnings and maintained sales growth is exactly what growth investors search for, as it suggests the company is getting more market share and getting better operational efficiency at the same time.
Profitability Improvements and Cash Flow Generation
Maybe most positive for growth investors is Hippo's move toward profitability. The company reported a positive profit margin of 1.1% in the most recent quarter, marking an important point for the insurtech provider. Free cash flow creation has also gotten much better, with FCF per share growing 111% over the past year to $0.73.
This getting better profitability picture is key because, as Minervini points out, "big earnings attract big attention." The pairing of good sales growth with developing profitability often gets institutional interest, which can drive continued multiple growth and price gain.
Technical Setup and Risk Management
According to the ChartMill technical report, HIPO has a perfect technical rating of 10/10 joined with a good setup rating of 8/10. The stock is currently moving within a set range between $33.45 and $37.82, with a main resistance area between $37.35 and $37.52. A move above this resistance level could signal the next step higher.
The technical study finds multiple support levels below the current price, with the closest support area between $34.96 and $35.57. This clear marking of support and resistance gives well-marked risk measures for position sizing and stop-loss placement, which is necessary for correct risk management in growth investing.
For a detailed technical study, review the complete HIPO technical report.
Investment Considerations
While Hippo Holdings presents an interesting growth story, investors should think about several factors. The stock's large gain over the past year means it may be prone to swings during wider market declines. Also, as a company in the insurtech area, it works in a competitive field against established insurance providers while trying to change traditional models through technology.
The company's recent steps toward profitability are positive, but investors should watch if this betterment is lasting and if the company can continue to balance growth spending with margin growth.
Discovering Similar Opportunities
For investors interested in finding other stocks with similar technical strength and growth traits, the High Growth Momentum + Trend Template screen methodically finds companies meeting both the Minervini Trend Template conditions and high growth momentum measures. This method can help investors build a watchlist of possible leaders showing the pairing of technical strength and fundamental improvement that often comes before important price gain.
Disclaimer: This study is for informational and educational reasons only and should not be taken as investment advice. The information given does not make a suggestion to buy, sell, or hold any security. Investors should do their own research and talk with a qualified financial advisor before making investment choices. Past performance is not a sign of future results.
