For investors aiming to profit from companies with high expansion potential, a merged method of technical and fundamental analysis can be an effective instrument. One particular tactic involves searching for solid growth stocks that are also showing favorable technical breakout formations. This technique seeks to pinpoint companies that are not only fundamentally sound and increasing their earnings at an above-average pace but are also receiving favorable momentum in the market, as seen in their price movement. The objective is to locate chances where solid business performance is being acknowledged and responded to by the wider market, possibly indicating the beginning of a continued upward move.
Harmony Gold Mining Co. Ltd. (NYSE:HMY) offers a noteworthy example for this investment method. As a large gold and copper producer with activities in South Africa and Papua New Guinea, the company is now displaying firm agreement with both the growth and technical momentum standards.
Solid Fundamental Growth Supports the Idea
The fundamental argument for HMY as a growth stock is strong. Based on ChartMill's detailed fundamental analysis, the company receives a firm total score of 7 out of 10, with especially high marks in Growth (7), Profitability (8), and Valuation (9). This blend is significant; it implies the company is enlarging quickly, producing good profits, and stays fairly valued, a trio that growth investors look for.
Important growth and profitability measures are prominent:
- High Earnings Growth: Earnings Per Share (EPS) jumped by 66.97% over the previous year.
- Firm Revenue Growth: Revenue increased by 20.39% in the last year and has a compounded annual growth rate of 20.37% over recent years.
- Strong Profitability: The company has a Return on Equity of 22.97% and a Return on Invested Capital of 20.62%, putting it in the high group of its industry.
- Favorable Valuation: Even with this firm performance, HMY trades at a Price/Earnings ratio of 15.5 and a forward P/E of only 7.0, making it much less expensive than both the industry average and the wider S&P 500.
This fundamental condition is essential for the tactic. A technical breakout carries much more weight and is more probable to continue if it is backed by firm and improving business fundamentals, instead of simple speculation.
Technical Momentum Affirms Market Acceptance
The technical view for HMY matches its fundamental firmness well. ChartMill gives the stock a high technical score of 10 out of 10. The examination shows that both the long-term and short-term trends are positive, an important requirement for spotting a lasting breakout situation.
Notable technical points consist of:
- The stock is trading close to its 52-week high, showing continued upward momentum.
- All main simple moving averages (20, 50, 100, and 200-day) are increasing and the present price is above them, affirming a bullish trend formation.
- The stock has done much better than the market, placed in the top 4% of all stocks over the past year.
- Most significantly, the technical analysis report mentions a recent "Pocket Pivot" signal, a price/volume formation that frequently shows accumulation by institutional investors, and sees very little overhead price resistance, implying a clear route for more advances.
This technical arrangement is precisely what the screening process tries to find. It shows that the market is actively compensating the company's fundamental advance with higher prices, and the momentum seems to be institutional in origin instead of retail-driven.
A Merging Chance
Harmony Gold Mining shows a merging of elements that growth-focused technicians search for. The company is performing very well, growing earnings and revenues at a quick rate while keeping high profitability. The market has observed, pushing the stock upward in a stable, trend-affirmed way with indications of firm buying pressure. The valuation stays moderate, offering a margin of safety not always found in high-growth situations.
This agreement of a firm, measurable growth story with affirming technical momentum forms a noteworthy investment picture. It illustrates the tactic of using fundamental analysis to find the "why" behind a company's possibility and technical analysis to decide the "when" for market entry.
Interested in finding other stocks that fit this profile? You can run the "Strong Growth Stocks with good Technical Setup Ratings" screen yourself to discover more opportunities here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The information presented is based on data provided and should not be the sole basis for any investment decision. Investing involves risk, including the potential loss of principal. Always conduct your own due diligence and consider consulting with a qualified financial advisor before making any investment decisions.
