Howmet Aerospace Inc (NYSE:HWM) – A Strong Growth Stock with Solid Fundamentals and Bullish Technical Setup

Howmet Aerospace Inc (NYSE:HWM) has become a strong option for investors looking for growth stocks with positive technical setups. The selection process uses both fundamental and technical analysis, targeting companies with good earnings growth, strong profitability, and stable finances while showing encouraging chart patterns. This method helps find stocks with both business strength and positive price movement, a mix that often leads to better performance over time.

Fundamental Strength: A Growth Stock with Quality Metrics

Howmet Aerospace’s fundamentals match the requirements for a solid growth investment. According to ChartMill’s Fundamental Analysis Report, the company performs well in several important areas:

• Growth (7/10): The company has reported strong earnings per share (EPS) growth of 44.39% over the past year, with expected yearly growth of 20.32%. Revenue growth has also been steady at 8.85% year-over-year, with projections pointing to 9.61% growth in the future.
• Profitability (9/10): Howmet has top-tier margins, including an 18.07% profit margin (better than 97% of competitors) and a 24.30% operating margin (top 1.5% of the industry). Return on invested capital (ROIC) is 16.08%, well above its cost of capital.
• Financial Health (7/10): The company keeps its debt under control, with a Debt-to-FCF ratio of 3.2, meaning it could pay off debts in just over three years using free cash flow. Its Altman-Z score of 9.27 suggests minimal bankruptcy risk.

While the valuation seems high (P/E of 56.54), this is partly due to Howmet’s strong growth path and industry-leading profitability, common traits of successful growth stocks.

Technical Setup: Consolidation Before Possible Breakout

The Technical Analysis Report points to a positive setup:

• Strong Long-Term Trend: The stock has risen 95.57% over the past year, beating 92% of the market, with consistent upward movement.
• Consolidation Near Resistance: After a significant rally, Howmet has been trading between $171.78 and $193.26, with a key resistance area at $190.49–$192.15. A move above this level could signal further gains.
• Support Levels Offer Protection: Multiple support zones exist below, including a key area at $178.86–$182.05, formed by moving averages and trendlines.

This setup suggests a possible entry point if the stock breaks resistance, with clear stop-loss levels to limit risk.

Why These Criteria Matter

As explained in the growth investing introduction, successful growth stocks combine rising earnings, strong market position, and technical confirmation. Howmet Aerospace fits this model:

1. Growing Market: The aerospace and defense sector is rebounding after the pandemic, with higher demand for aircraft parts and engineered structures, Howmet’s main businesses.
2. Strong Operations: High margins and ROIC show pricing power and efficient use of capital.
3. Technical Momentum: The stock’s consolidation near highs suggests potential for a breakout.

Finding More Opportunities

For investors interested in similar high-growth stocks with strong technical setups, more options can be found using the Strong Growth Stocks with Good Technical Setup Ratings screener.

Disclaimer: This analysis is for informational purposes only and should not be seen as investment advice. Always do your own research or consult a financial advisor before making investment decisions.