In the search for stocks with high potential, a method that joins detailed technical study with basic growth measures can be very effective. One technique follows ideas from trader Mark Minervini, whose Trend Template gives a structured way to locate stocks in clear, strong upward moves. This technical plan is improved by looking for companies showing solid internal growth speed, as seen in scores like ChartMill's High Growth Momentum (HGM) rating. This two-part method aims to locate companies that are not only being bought by the market but also have improving business foundations, a pairing frequently seen in top market performers.
Kulicke & Soffa Industries (NASDAQ:KLIC) appears as a stock that now fits this joined plan. As an important company in making equipment for semiconductor assembly, its results are linked to the changing but large semiconductor field. A detailed look shows that KLIC now meets the main technical points of the Minervini Trend Template and also shows traits that interest investors focused on growth.
Fit with the Minervini Trend Template
Mark Minervini's Trend Template is made to find stocks in a clear Stage 2 rise, making sure an investor buys into confirmed strength instead of trying to buy a falling stock. The template has several strict price and moving average rules. KLIC's present chart shows a good match:
- Price Above Important Moving Averages: The stock trades above its 50-day ($65.90), 150-day ($51.01), and 200-day ($47.12) simple moving averages (SMAs). This order confirms the stock is in a long-term positive phase.
- Upward Moving Average Directions: Importantly, these moving averages are all moving up. The 200-day SMA, a guide for the long-term direction, has increased from 46.96 to 47.12, confirming continued buying over many months.
- Correct Moving Average Order: The shorter 50-day SMA is above both the 150-day and 200-day SMAs, and the 150-day SMA is above the 200-day. This "stacked" order is a known sign of a good, speeding upward move.
- Nearness to Highs: KLIC's price of $66.62 is within 15% of its 52-week high of $77.50, meeting the template's rule of being within 25% of the high. At the same time, it is about 137% above its 52-week low of $28.11, much more than the 30% limit. This shows the stock has notable speed behind it and is not a low-priced stock coming from a big drop, but a solid performer.
- Better Relative Performance: With a ChartMill Relative Strength (CRS) rating of 93.9, KLIC is doing better than nearly 94% of all stocks. Minervini notes that real market leaders regularly show high relative strength, as it points to institutional buying and money moving into the leading stock.
This combination of factors indicates KLIC is in a technically sound upward move, meeting the main screen for a speed-based method.
Business Foundations and Growth Speed
While the Trend Template checks a stock is technically good, the High Growth Momentum (HGM) rating tries to confirm that strength with business force. KLIC's HGM rating of at least 6 points to internal business speed. Several facts support this:
- Earnings Speed Increase: The company has shown a notable change to profit. While year-over-year results have varied in recent quarters, the future guesses are solid. Most clearly, analysts have greatly raised their guesses, with the average EPS guess for the next year increasing by over 75% in the last three months. Such strong upward changes are a powerful force, often coming before notable price moves as seen in Minervini's SEPA (Specific Entry Point Analysis) method.
- Return to Profit: After a difficult time, KLIC has returned to clear profit. The trailing twelve-month (TTM) EPS is $0.27, showing a large 145% increase over the past TTM time. The profit margin in the newest quarter grew to 8.41%, up from 3.59% in the quarter before, showing better operational efficiency.
- Good Free Cash Flow: The company makes healthy free cash flow, with FCF per share at $1.45 for the TTM time, growing over 65% from the year before. This gives financial room for spending, purchases, or returns to shareholders.
- Sales Speed Return: After several quarters of decrease, the newest quarter saw sales grow over 20% year-over-year. Also, guesses for the next quarter predict sales growth of nearly 45%, suggesting analysts expect a continued return of demand for the company's semiconductor equipment.
These parts, rising guesses, growing margins, and a return to sales growth, show a company in the early part of a business upswing, which can support the technical upward move found by the Trend Template.
Technical Condition and Position Summary
ChartMill's own technical report gives a combined view of KLIC's chart condition. The stock gets a high Technical Rating of 9 out of 10, showing its solid and steady results across many time frames. The long-term direction is rated as positive, and the stock is doing better than most of the market. The report notes several support levels below the present price, with the closest group between $62.52 and $65.90, which matches the rising 50-day and 150-day moving averages.
The Setup Quality Rating is 5, showing that while the stock is technically very good, it is not now in a close, low-volatility pattern that often comes before a fast breakout. The report says prices have been moving lately within a somewhat wide one-month area ($59.30 - $69.97), and the stock is now trading in the middle of this area. For a trader following Minervini's methods exactly, this indicates a possible entry might be better found on a controlled move back toward support or a clear breakout above the recent area high with volume. You can see the full, detailed technical study on the ChartMill Technical Report for KLIC.
Conclusion
Kulicke & Soffa Industries shows a situation where a solid technical path, as described by the Minervini Trend Template, meets a business profile showing signs of notable positive speed. The stock is in a clear long-term upward move, showing market-leading relative performance, while its internal business is seeing upward earnings changes, margin growth, and a predicted return of sales speed. This link between price movement and business gain is exactly what plans joining speed and growth investing aim to find.
It is important to see that the semiconductor equipment field is cyclical, and KLIC's results are linked to spending cycles in the wider tech field. Also, with the stock trading in the middle of its recent area, the immediate risk and reward for a new entry may need detailed thought about position amount and stop-loss use, following the strict risk rules that are basic to any controlled trading method.
For investors looking to find other stocks that meet this mix of solid trend and high growth speed, you can see the set screen here.
Disclaimer: This article is for information and learning only. It is not meant as investment advice, a suggestion, or an offer to buy or sell any security. The study is based on given data and certain methods, but past results do not guarantee future results. Investing has risk, including the possible loss of money. You should do your own study and talk with a qualified financial advisor before making any investment choices. Please read our full disclaimer here.