For investors looking to join solid fundamental momentum with well-timed technical entry points, a multi-factor screening method can be especially effective. By selecting stocks that show solid earnings and sales growth, positive estimate changes, and rising profit margins, qualities measured by the ChartMill High Growth Momentum Rating, and then adding strong technical condition and a favorable price pattern, traders try to find chances where growth and timing come together. This method tries to answer two important questions: which stock has the fundamental strength to push prices upward, and when is a technically reasonable time to think about an entry?
INNOVATIVE SOLUTIONS & SUPPORT (NASDAQ:ISSC) appears from such a screen, presenting a profile that deserves more attention from growth-focused investors.
Fundamental Growth Momentum
The center of the high-growth momentum plan is finding companies with speeding-up business results. ISSC displays several important measures that add to its good High Growth Momentum Rating of 7.
- Strong Earnings and Sales Growth: The company's trailing twelve-month (TTM) EPS increased by 80% year-over-year, while TTM revenue jumped by 78.6%. This top-and-bottom-line growth is a sign of a company in a solid growth period.
- Recent Quarterly Momentum: While growth rates have slowed from very high levels, the latest quarter still recorded notable year-over-year gains of 57.1% for EPS and 44.6% for sales. The two quarters before showed even more notable sales growth above 100%.
- Profit Margin Improvement: An important signal of operational efficiency and pricing ability, ISSC's quarterly profit margin has shown marked betterment. The last reported quarter's profit margin of 32.0% is much higher than the 10.1% and 4.6% margins from the two quarters before, showing the company is turning more of its revenue jump into net income.
- Solid Free Cash Flow Production: Free cash flow per share over the TTM period increased by a notable 664% year-over-year, giving the company financial room and confirming the quality of its earnings.
- Earnings Surprises: The company has exceeded EPS estimates in two of the last four quarters, with an average surprise of 70.2%, and has beaten revenue estimates in all of the last four quarters.
These factors together create an image of a company going through a solid fundamental rise, which is exactly what the High Growth Momentum Rating is made to find.
Technical Condition and Pattern
A solid growth story must be supported by the price action. According to the detailed ChartMill Technical Report, ISSC receives a top-level Technical Rating of 9 out of 10. This score shows very good technical condition across several timeframes.
- The long-term pattern is firmly positive, while the short-term pattern is neutral, indicating a time of consolidation inside a larger upward pattern.
- The stock is trading above all its main moving averages (20, 50, 100, and 200-day SMAs), which are all in upward arrangements.
- Its relative strength is very good, doing better than 97% of all stocks in the market over the past year and placing in the top 5% of its Aerospace & Defense industry group.
This technical rating speaks to the "which stock" question by confirming that the market is acknowledging the company's fundamental advance through continued upward price movement.
Pattern Quality and Entry Details
A high technical rating alone does not always offer a low-risk entry point. This is where the Setup Quality Rating of 7 becomes important. The report states that prices have been consolidating in a wide range over the past month, with lower volatility, a common pattern coming before a possible new directional move.
- The consolidation allows for a clearly marked support area around $18.49, which is made by several trend lines across timeframes.
- The analysis states "very little resistance above the current price," indicating a clear way higher if the stock can move up from its current range.
- Notably, the report points out that large investors have shown interest in ISSC lately, often a sign before notable price movement.
The pattern suggests a possible trade idea, with an entry thought about on a move above $22.29 and a stop loss below the marked support. This organized method to entry and risk control is what the setup rating is made to help, answering the "when" question for traders.
Finding Like Chances
ISSC shows the kind of chance that appears when high-growth fundamentals meet a favorable technical formation. For investors interested in searching the market for similar meetings of momentum, growth, and pattern quality, this plan can be copied using specific screening tools.
You can find more stocks that meet these joined standards of solid growth momentum and technical breakout patterns by running the High Growth Momentum Breakout Setups Screen.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. The analysis is based on data provided and reflects conditions at a specific point in time. 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. The trade example mentioned is automatically generated and for illustrative purposes only.
