In growth investing, joining a solid technical system with detailed fundamental study can be a strong way to find possible leading companies. One technique that shows this combination is the method made known by trader Mark Minervini. His system depends on the "Trend Template," a group of technical rules made to find stocks in clear, strong upward trends. This is combined with an emphasis on fundamental health, looking for firms with quickening profit and revenue expansion—the signs of real high-growth momentum. This two-part system tries to find stocks not only as they increase, but as they form the base for continued results.
KEYSIGHT TECHNOLOGIES INC (NYSE:KEYS) stands as a present example that seems to fit this orderly growth-and-trend system. The firm, a maker of electronic design and test tools, works in areas pushed by new developments in communications, networking, and electronics, fields where steady expansion is often valued.
Fitting the Minervini Trend Template
The Minervini Trend Template is exact; a stock must meet all its technical rules to be reviewed. For KEYS, the present technical view shows a notable fit with these rules, which are made to sort for stocks in a definite, continued Stage 2 rise.
- Price Above Important Moving Averages: The stock's last price of $277.53 trades well above its rising 50-day ($248.95), 150-day ($203.86), and 200-day ($193.74) simple moving averages (SMAs). This meets the main need that price action is firm across all major time periods.
- Moving Average Order: The 50-day SMA is above both the 150-day and 200-day SMAs, and the 150-day is above the 200-day. This "ordered" setup of shorter-term averages above longer-term ones is a classic mark of a sound, quickening upward trend.
- Nearness to Highs: At $277.53, KEYS is trading within 13% of its 52-week high of $317.00, easily within the Template's need of being within 25% of the high. At the same time, the price is over 128% above its 52-week low of $121.43, well past the 30% limit. This shows firm recovery momentum and placement near leading area.
- Better Relative Strength: Maybe most important in Minervini's system is relative strength (RS), which checks a stock's results against the wider market. KEYS has a ChartMill Relative Strength (CRS) score of 94.67, meaning it has done better than about 95% of all stocks over the past year. High RS is a main sign of institutional interest and market leadership.
Meeting the High Growth Momentum Standard
While the Trend Template makes sure a stock is technically sound, the "High Growth Momentum" filter works to confirm that strength with fundamental force. KEYS shows several traits that growth investors look for first.
- Profit Acceleration: A central part of growth investing is not only expansion, but quickening expansion. KEYS shows good momentum in its quarterly earnings per share (EPS). The latest quarter had year-over-year EPS expansion of 19.2%, a gain from the 15.8% expansion in the quarter before. This pattern of recent quickening is a good sign.
- Steady Profit Surprises: The company has topped analyst EPS guesses in each of the last four quarters, with an average beat of 2.74%. This steady skill to beat guesses builds trust with investors and can be a reason for more price gains.
- Firm Sales Expansion: Revenue expansion supplies the top-line fuel for bottom-line growth. KEYS reported notable sales expansion of 23.3% in its last quarter, a major quickening. Also, analysts have raised their revenue guesses for the next year by 7.6% over the past three months, showing increasing positive view about the firm's future.
- Sound Profitability: Expansion is most useful when it is profitable. KEYS keeps good profit margins, with the last quarter's margin at 17.6%. The company also makes firm free cash flow, reporting $7.82 per share over the past twelve months, which allows room for investment and shareholder returns.
Technical Condition Summary
The given technical study report gives a short summary of KEYS's market position. The stock gets a complete Technical Rating of 10 out of 10 from ChartMill, showing "a steady result in both the short and longer term time frames." Both the short-term and long-term trends are rated as good. The report states the stock is doing better than 94% of the market and 81% of its industry group (Electronic Equipment, Instruments & Components), further confirming its leading status. While the setup rating is a middle 5, showing the stock is not in a tight base pattern best for a new breakout entry, the overall technical condition is called "very good."
You can see the full technical report for KEYS here.
Locating Like Possibilities
For investors curious about using this joined trend-and-growth system to find other possible examples, the scanning process that found KEYS is a sensible first step.
Disclaimer: This article is for information and learning only. It is not a suggestion to buy or sell any security. The study is based on present data and a specific investment system, and past results are not a guide for future results. Always do your own complete research and think about your personal money situation and risk comfort before making any investment choices.