A method for stock selection often joins strict technical standards with attention to business momentum. The process used here sorts the market through two views: first, it uses the main ideas of Mark Minervini's Trend Template to find securities showing solid, clear uptrends. Second, it adds a High Growth Momentum (HGM) rating, which measures a company's earnings and sales speed, changes in estimates, and price action compared to its growth path. This combination seeks to find companies that are both technically good and showing the business strength that frequently comes before large price gains.
nLIGHT INC (NASDAQ:LASR) comes from this screening process as a candidate for more review. The laser technology company, which makes parts for industrial, microfabrication, and defense uses, seems to be performing well in several areas.
Fitting the Minervini Trend Template
The Trend Template is made to sort for stocks in a strong Stage 2 advance, passing over weak performers and finding leaders. A look at LASR's technical position shows it meets the important points:
- Trend Position: The stock's price is trading well above its rising 50-day ($37.47), 150-day ($30.25), and 200-day ($25.81) simple moving averages. Importantly, the 50-day average is above the 150-day, which is above the 200-day, confirming an ordered and sound long-term trend arrangement.
- Nearness to Highs: LASR's current price is about 625% above its 52-week low of $6.20, showing great recovery power. Also, it is trading within 7% of its 52-week high of $48.31, matching the template's look for stocks showing leadership by testing new highs.
- Strong Relative Performance: With a ChartMill Relative Strength (CRS) score of 98.54, LASR is doing better than nearly 99% of all stocks in the market. This very strong relative performance is a key part of the Minervini idea, which looks for market leaders, not laggards.
This technical picture points to institutional buying and a continued positive trend, giving a good setting for more growth.
Showing High Growth Momentum
Beyond the chart, LASR shows several business traits that interest growth-focused investors. The HGM rating includes items like earnings speed and positive estimate changes, which Minervini notes as important for "super-performance" stocks.
- Earnings Speed: The company has shown a sharp change to profitability. While the trailing twelve-month (TTM) EPS is negative, the quarterly direction is strongly positive. Year-over-year EPS growth for the last reported quarter jumped 200%, after growth of 160% in the quarter before.
- Large Estimate Changes: Maybe the strongest sign is the activity among analysts. The consensus EPS estimate for the next fiscal year has been moved upward by almost 300% over the past three months. Such strong upward changes often show better business clarity and can be a strong force for the stock price.
- Sales Growth Returning: After a time of decrease, revenue growth is coming back. Quarterly sales grew 18.9% year-over-year last quarter, speeding up from 16% growth the quarter before. Future estimates suggest a notable speed increase, with next quarter's sales expected to grow more than 63%.
These parts, speeding earnings, high analyst confidence, and returning sales growth, describe a company possibly at a turning point, a main idea in high-momentum investing.
Technical Condition and Setup Points
According to ChartMill's own analysis, LASR is given a complete Technical Rating of 10/10, showing very good condition across short and long-term periods. The report notes the stock is doing better than 98% of the market and 96% of its industry group. However, the analysis also gives a point of care for immediate entry: the Setup Quality rating is a middle 5. The report says that "price movement has been a little bit too volatile to find a nice entry and exit point," meaning that while the trend is strong, the stock might gain from a time of settling before giving a lower-risk chance to buy. Investors should see the full technical report for detailed support levels and chart study.
Locating Like Chances
For investors curious about using this joined plan of trend-following and growth momentum to find other possible candidates, the screening process that found LASR can be copied. You can look at the current market for similar situations by using the High Growth Momentum + Trend Template screen on ChartMill.
Disclaimer: This article is for informational and educational purposes only. It is not a recommendation to buy or sell any security. The analysis is based on data provided and certain screening methodologies. All investing involves risk, including the potential loss of principal. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.
