INCY CORP (NASDAQ:INCY) has recently appeared on a specific screen made to find stocks that fit Mark Minervini's strict Trend Template while also displaying the fundamental traits wanted by high-growth momentum investors. This dual method aims to find companies that are not only in strong technical uptrends but are also supported by improving business fundamentals, a pairing that has in the past been a sign of market-leading performance.
The method relies on a two-part analysis. First, it uses Minervini's Trend Template, a structured set of technical rules that selects for stocks in clear Stage 2 uptrends, confirming price strength and agreement across important moving averages. Second, it adds a High Growth Momentum (HGM) rating, which assesses a company's earnings, sales growth, profit margins, and analyst revisions to confirm the technical strength is backed by sound and getting better fundamental health.
Technical Strength: Following the Minervini Trend Template
A central idea of the Minervini strategy is to only invest in stocks that are already in a clear uptrend, steering clear of the risky attempt to buy a declining stock. INCY shows a very close fit to the Trend Template's technical rules, which are made to find such strength.
- Price Above Key Moving Averages: The stock's current price is trading significantly above its increasing 50-day, 150-day, and 200-day simple moving averages. This agreement confirms that the short, intermediate, and long-term trends are all positive.
- Moving Average Agreement: The 50-day SMA is located above the 150-day SMA, which is also above the 200-day SMA. This ordered positive agreement, with the shorter-term averages ahead of the longer-term ones, is a standard indicator of a sound, speeding up uptrend that Minervini highlights.
- Proximity to Highs: INCY is trading within 4% of its 52-week high and is more than 95% above its 52-week low. Minervini's belief is to concentrate on strength, not weakness; leaders are usually found close to new highs, not with heavily discounted poorer performers.
- Superior Relative Strength: With a ChartMill Relative Strength (CRS) rating of 90.79, INCY is doing better than almost 91% of all stocks in the market. A high relative strength number is essential in this strategy, as it shows the stock is a market leader and is being bought by institutional investors.
Fundamental Momentum: The Driver for Growth
While a strong chart is very important, Minervini points out that the largest winners are almost always helped by strong fundamental growth. INCY's High Growth Momentum rating is supported by several notable metrics that indicate the company's growth narrative is speeding up.
- Strong Earnings Growth: The company has reported very high year-over-year earnings growth in recent quarters, including 111.2% in the most recent quarter and 186.3% in the quarter before. This sequence of major acceleration is a main catalyst that often pulls in institutional interest and leads to large price gains.
- Consistent Revenue Growth and Surprises: Top-line growth is also sound, with the last quarter showing a 20.0% year-over-year rise. Also, INCY has surpassed revenue estimates in each of the past four quarters, with an average beat of 3.8%. This regularity in beating forecasts builds trust and can result in higher revisions in future estimates.
- Getting Better Profitability: The company's profit margin in the last quarter was a good 31.1%, showing a capability to turn revenue into earnings effectively. Positive analyst opinion is also clear, with the average EPS estimate for next year being raised by more than 10% in the past three months, a clear sign of belief in the company's short-term outlook.
Technical Analysis Overview
A look at the detailed technical report for INCY gives the stock a top rating of 10 out of 10, labeling its overall technical health as very good. The report states that both the long and short-term trends are positive and that the stock is currently showing a bull flag pattern, which can sometimes come before a resumption of the earlier uptrend. With a firm support zone found below the current price and a setup rating of 7, the chart offers a clear, lower-risk zone for a possible entry and stop-loss placement.
Finding Similar Opportunities
For investors looking for other companies that meet this strict mix of technical and fundamental rules, the High Growth Momentum + Trend Template screen can be a useful beginning for more study.
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