LendingClub Corp (NYSE:LC) Shows Strong Technical and Fundamental Momentum

The method of joining Mark Minervini's Trend Template with a High Growth Momentum (HGM) rating is built to find stocks that are in strong technical uptrends and also supported by solid fundamental growth. This two-step process looks to find companies that lead the market, showing both price momentum and improving business results. By following Minervini's precise technical list, investors try to start positions during a stock's Stage 2 rise, while the HGM rating confirms the company is showing the earnings and sales growth that frequently supports continued price gains.

Technical Fit with the Minervini Trend Template

LendingClub Corp (NYSE:LC) shows a strong technical view that fits well with the rules of Minervini's Trend Template. This template is central to the method, as it methodically finds stocks in established, long-term uptrends, removing less strong choices.

A look at LC's chart and main numbers shows it fits the central technical needs:

• Trading Above Important Averages: The stock's present price of $19.76 trades well above its rising 50-day ($17.16), 150-day ($14.78), and 200-day ($13.71) simple moving averages. This arrangement confirms a positive long-term trend, a basic need for any Minervini setup.
• Moving Average Order: The 50-day SMA is above both the 150-day and 200-day SMAs, and the 150-day SMA is above the 200-day SMA. This ordered, upward-sloping pattern is a clear sign of building momentum and institutional buying.
• Nearness to Highs: LC is now trading within 1.2% of its 52-week high of $20.00, well inside the template's rule of being within 25% of the high. At the same time, the price is about 150% above its 52-week low of $7.90, much higher than the 30% minimum. This shows strong rebound momentum and a tendency to lead.
• Better Relative Strength: With a ChartMill Relative Strength (CRS) score of 83.4, LC does better than 83% of all stocks in the market and 79% of stocks in its Consumer Finance industry. Minervini notes that real market leaders show high relative strength, as they are the first to rebound and rise.

This technical condition is shown in LC's high ChartMill Technical Rating of 9 out of 10, pointing to a stock in a solid uptrend. The method focuses on such technical strength because it shows underlying demand and helps investors steer clear of the problems of trying to buy a declining stock or buying into flat charts.

Fundamental Reasons for High Growth Momentum

While the Trend Template shows how a stock is moving, the High Growth Momentum rating tries to show why. For LC, the "why" is based in a major and speeding turnaround in its core profit numbers. This fundamental speed is important, as Minervini's work shows that the largest stock market winners are nearly always backed by strong earnings growth.

The company's latest financial performance shows several main growth factors:

• Strong Earnings Speed: The latest quarter shows year-over-year EPS growth of 184.6%, a sharp increase from the 153.8% growth in the quarter before. This steep rise is a main sign for momentum investors. Analysts are noticing, with agreement estimates for the next quarter rising by 332.8% and next year's estimates moved up by 17.5% over the last three months.
• Growing Profitability: The company's profit margin has shown steady gain, reaching 16.6% in the last reported quarter, up from 15.4% and 5.4% in the earlier quarters. This pattern of growing margins points to better operational efficiency and pricing ability, a sign of lasting growth.
• Solid Revenue Growth: Top-line growth stays strong, with revenue up 31.9% year-over-year in the most recent quarter. The company has exceeded revenue estimates in three of the last four quarters.
• Recovery Path: On a trailing twelve-month (TTM) basis, EPS has grown 91.3%, pointing to a strong recovery story. This fits with the HGM screen's aim of finding companies where business momentum is fundamentally changing the stock's price.

Present Situation and Risk Factors

According to the detailed ChartMill Technical Report, LC's main difficulty for new buyers is its present setup condition. The report states that while the technical rating is high, the stock "does not offer a high quality setup at the moment," giving a Setup Rating of 3. The price has been unstable and is trading near the top of its recent range, making a good, low-risk entry point less obvious.

For investors using a Minervini-style method, this indicates care. The method focuses on specific entry points, often during a "volatility contraction pattern" (VCP) within the existing uptrend. While LC is a strong trend candidate, it may need waiting for a constructive pause or pullback toward important support areas, such as the zone between $17.09 and $17.42 where several moving averages meet, before a standard, low-risk entry appears.

Summary and More Study

In summary, LendingClub Corp shows the kind of stock sought by the joined Minervini and HGM method. It has the technical marks of a market leader in a clear uptrend, checked by a top-level Technical Rating. Fundamentally, it is showing the kind of strong earnings speed and gaining margins that can support continued momentum.

For a full look at the technical view, including noted support zones and trend study, readers can see the full ChartMill Technical Report for LC.

---

Interested in finding more stocks that fit this strict growth-and-trend model? You can use the same "High Growth Momentum + Trend Template" screen that found LC to find other possible choices. Click here to access the screen and see the present results.

---

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 methodologies, past performance is not indicative of future results. Always conduct your own due diligence and consider consulting with a qualified financial advisor before making any investment decisions.