For investors looking to join solid earnings momentum with well-timed technical entry points, a layered screening method can be very useful. One such process uses filters for stocks that show firm basic growth foundations, as judged by ChartMill's High Growth Momentum (HGM) Rating, while also showing sound price movements and consolidation shapes, measured by the Technical (TA) and Setup Quality Ratings. This method tries to find companies that are not just increasing at a fast rate but also offering an organized chance for entry as they come out of a time of price consolidation, possibly ready for their next upward move.
INDIVIOR PHARMACEUTICALS INC (NASDAQ:INDV) appears as a candidate from this screen, deserving closer study by growth-focused investors.
Fundamental Growth Momentum
The heart of the high-growth momentum method is finding companies with speeding business results. INDV's basic profile shows several strong data points that add to its HGM Rating of 6, pointing to a firm growth profile.
- Outstanding Earnings Growth: The company's trailing twelve-month (TTM) EPS has increased by more than 256% year-over-year. This rapid growth is a main force for momentum investors.
- Recent Quarterly Momentum: While year-over-year sales growth has been small, the latest quarter showed a good shift with sales growth of 2.3% and EPS growth of 33.3%. More notably, the next quarter's forecasts predict a large speed-up, with EPS expected to increase by almost 115%.
- Firm Execution and Analyst Trust: INDV has exceeded both EPS and revenue forecasts in each of the past four quarters, with an average EPS surprise of more than 70%. Also, analysts have raised their next-year EPS forecasts by more than 81% over the past three months, showing rising trust in the company's short-term profit path.
- Gaining Profitability: The company's profit margin in the last reported quarter was 13.4%, a clear gain from the 6.0% margin in the previous quarter, hinting at possible operating leverage and more effective growth.
These factors, strong historical EPS growth, forecasted speed-up, steady earnings beats, and positive estimate changes, are exactly the measures the HGM Rating uses to find companies with short-term earnings momentum, making INDV a fitting candidate for this investing style.
Technical Strength and Trend
A firm basic story is most effective when joined with a supportive price trend. According to the detailed technical report, INDV receives a solid TA Rating of 8. This score shows the stock's firm longer-term price health within the wider market setting.
- Long-Term Superior Performance: INDV's price action over the past year puts it in the top 4% of all stocks, and it does better than 90% of its friends in the Pharmaceuticals industry. The long-term trend is clearly positive.
- Market Front Position: The stock is trading in the higher part of its 52-week range. While the report states it is a bit behind the S&P 500's recent new highs, its absolute performance and relative strength are important.
- Moving Average Backing: The stock's price stays above key rising moving averages (50-day, 100-day, and 200-day), which is a standard sign of a continued uptrend.
The Setup and Trade Dynamics
The last part is finding a low-risk entry point. A high TA Rating alone does not promise a good setup; a stock can be stretched and likely to pull back. INDV's Setup Rating of 7 implies the stock is now making a constructive pattern.
- Consolidation Time: The technical report states "reduced volatility while prices have been consolidating in the latest period." This consolidation, after a firm upward move, lets the stock ease overbought states and form a new base of support.
- Set Risk Limits: The study finds a clear support area between $32.53 and $32.65, made by a mix of trendlines and moving averages. Below this, a sensible stop-loss level can be set. On the other hand, a resistance area exists between $36.22 and $36.61.
- Breakout Chance: The proposed setup includes an entry point just above the $36.22 resistance level. A clear move above this area could mark the end of the consolidation and the start of the next upward stage, offering a possible entry with a set risk level below the support area.
This mix, a firm long-term trend (TA Rating 8) with a current halt forming a base (Setup Rating 7), creates the "breakout setup" that technical traders look for, matching the timing of an entry with the stock's basic growth story.
Finding Similar Opportunities
INDV shows how joining growth momentum with technical discipline can point out possible investment ideas. For investors wanting to use this method to find other candidates, the screen that found INDV is a useful beginning point.
You can find more stocks that meet this standard of high growth momentum with a technical breakout setup by using the High Growth Momentum Breakout Setups screen.
Disclaimer: This article is for information and learning only and does not form investment advice, a suggestion, or an offer or request to buy or sell any securities. The study is based on given data and includes inherent risks. Investors should do their own separate research and due care and think about talking with a qualified financial advisor before making any investment choices. Past performance is not a guide to future results.
