LENDINGCLUB CORP (NYSE:LC) Emerges as a High-Growth Momentum Breakout Candidate

For investors looking to join strong earnings momentum with favorable technical patterns, a multi-factor screening method can be an effective instrument. One such technique involves finding stocks that rank highly on three specific ChartMill ratings: the High Growth Momentum (HGM) Rating, the Technical (TA) Rating, and the Setup Quality Rating. The objective is to locate companies showing solid short-term fundamental improvement, trading within a firm price trend, and currently pausing in a formation that indicates a possible breakout. This combination of elements tries to find chances where notable earnings growth may be ready to push the next stage of a price increase.

LENDINGCLUB CORP (NYSE:LC) recently appeared from a scan using this specific tactic, which demanded a minimum HGM Rating of 4, a TA Rating over 7, and a Setup Rating over 7. The digital marketplace bank makes a strong case for high-growth momentum investors, backed by both its fundamental path and its technical position.

Fundamental Growth Momentum

The center of the High Growth Momentum Rating concentrates on short-term earnings improvement, positive surprises, and analyst changes, important factors for momentum plans. LendingClub’s recent quarterly report shows notable momentum on many of these points.

• Notable EPS Growth: The company's latest quarter displayed a year-over-year EPS growth of 184.6%, a sharp change from the -11.1% and -9.1% seen in the two earlier comparable quarters. This sudden shift is a main signal the HGM rating tries to identify.
• Firm Sales Increase: Revenue growth has stayed solid, with the last quarter up 31.9% year-over-year. This shows top-line strength is aiding the bottom-line jump.
• Positive Estimate Changes: Analysts have been improving their view, with the average EPS estimate for the next year moved higher by 11.3% over the past three months. Such changes often come before more positive price movement as the market absorbs better expectations.
• Growing Profitability: The profit margin in the last reported quarter was 16.6%, up from the previous quarter's 15.4% and a marked gain over the 4.5% margin from three quarters before. Growing margins point to operating efficiency and better earnings quality, which is a vital part of lasting growth.

While the company's longer-term measures show some fluctuation, and free cash flow remains an area to monitor, the short-term momentum view is clear and positive. This fits exactly with the scanning idea of finding companies where earnings improvement is occurring now, making them possible candidates for market leadership.

Technical Firmness and Setup Quality

A strong fundamental story is most effective when joined by a supportive price chart. According to ChartMill's detailed technical report, LendingClub performs well here too, receiving a near-perfect TA Rating of 10 and a high Setup Rating of 9.

• Firm Uptrend: The report states that both the short-term and long-term trends for LC are positive, a main support of its top technical score. The stock is trading near its 52-week high and does better than 85% of the total market.
• Industry Outperformance: Inside the competitive Consumer Finance industry, LC is doing better than 82% of its peers, confirming relative firmness.
• Pause for Possible Breakout: The high Setup Rating of 9 shows the stock has been pausing its recent gains in a constructive formation, with lower volatility. The report points out a specific bull flag pattern, which often comes before a continuation of the earlier uptrend. Support is clearly marked near the $20.14 level, giving a logical area for a stop-loss order.
• Supportive Measures: Additional positive technical signs include recent activity from large participants (measured by Effective Volume) and a recent Pocket Pivot signal, both indicating institutional buying during the pause.

This technical setting answers the important "when" question for momentum investors. The stock is not overbought but is instead halting within a firm trend, offering a possible entry point with a defined risk management level below support.

A Merging Chance

The scanning tactic that found LendingClub is made to locate stocks where fundamental momentum and technical readiness merge. LC shows this: its striking quarterly EPS improvement and positive analyst changes meet the central ideas of high-growth momentum investing, while its firm relative strength and tight pause formation present a favorable technical setup. This mix indicates the company's getting better fundamentals may be acknowledged by the market through a possible breakout from its present trading range.

For investors wanting to examine other stocks that meet this particular mix of high-growth momentum and technical breakout conditions, the scan can be reviewed here: High Growth Momentum Breakout Setups.

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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 and instruments provided by ChartMill, and past performance is not indicative of future results. Investors should perform their own research and consider their personal financial situation and risk tolerance before making any investment decisions.