Lumentum Holdings Inc (NASDAQ:LITE) offers a strong case for investors using a high growth momentum strategy paired with technical breakout analysis. This method finds companies with solid earnings momentum, improving growth measures, and positive technical patterns that indicate a possible extension of rising price trends. The system uses ChartMill's own ratings model, which assesses stocks on three important aspects: fundamental growth momentum with the High Growth Momentum Rating, general technical condition using the Technical Rating, and pattern strength with the Setup Rating. Stocks that rate highly in these areas usually represent businesses seeing both operational improvement and positive market attention.
Fundamental Growth Momentum
Lumentum's fundamental picture shows a number of features that high growth momentum investors usually look for. The company displays outstanding earnings improvement and strong sales increases over several periods, with notable performance in the latest quarterly results.
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EPS Growth Measures:
- Quarterly EPS increase of 511% versus the same quarter last year
- Prior quarter showed a notable 1,367% EPS increase year-over-year
- Trailing twelve-month EPS increase of 249%
- Next quarter forecasts predict 224% EPS growth
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Revenue Improvement:
- Latest quarterly sales increase of 58% year-over-year
- Steady improvement from 10% growth three quarters ago to present amounts
- Next quarter revenue growth forecast at 58%
- Full-year revenue increase of 33% on a TTM basis
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Estimate Changes and Surprises:
- Four straight quarters of EPS beats, averaging 9.8% above forecasts
- Positive analyst changes with next-year EPS forecasts climbing 19% over three months
- Revenue forecasts for next year lifted by 7% in recent months
These measures fit with central ideas of high growth momentum investing, where improving earnings, positive surprises, and rising estimate changes frequently come before continued stock price gains. The change from moderate growth to three-figure percentage rises in recent quarters is especially noticeable as a trait of companies beginning high momentum periods.
Technical Condition and Market Standing
Lumentum's technical picture shows solid market acknowledgment of its fundamental gains. The stock gets a full Technical Rating of 10, signaling very good technical condition across many periods and measures. This rating looks at relative performance, trend strength, moving average agreement, and level within the wider market.
Important technical positives contain:
- Long-term and short-term trends both rated positive
- Performing better than 98% of all stocks on a yearly performance basis
- Positioned in the top 3% inside the Communications Equipment industry
- Trading in the higher area of its 52-week period
- All main moving averages (20, 50, 100, and 200-day) moving upward
- Recent volume growth supporting price gains
The stock's relative performance rating of 98.57 shows notable outperformance compared to the wider market, a trait often seen in leading growth stocks during momentum periods.
Setup Strength and Trading Points
With a Setup Rating of 8, Lumentum shows a clear consolidation pattern after its major gain. The technical study suggests prices have been settling recently, building a foundation that may support another upward move. The setup displays several positive traits for possible breakout traders.
Notable setup aspects:
- Defined support area between $226.85 and $232.14 created by several trendlines and moving averages
- Little resistance above present price levels
- Recent pocket pivot signal showing institutional buying
- Present trading span between $184.20 and $282.66 over the last month
The detailed technical study indicates a possible entry above $282.67, which would mean a breakout above recent consolidation, with proposed stop loss position below the identified support area. This gives a clear risk measure for traders thinking about starting a position.
Market Setting and Use
While Lumentum displays solid individual traits, investors should think about the wider market situation. At present, the S&P 500 shows a negative long-term trend even with positive short-term momentum, indicating a careful method to new positions remains wise. The mix of Lumentum's solid individual measures against a varied market background points to the value of strict stock selection.
For investors wanting to find similar chances, the High Growth Momentum Breakout Setups screen regularly finds stocks meeting these requirements, giving a structured way to find companies with solid growth momentum and positive technical setups.
Disclaimer: This study is for information only and does not make up investment guidance, suggestion, or backing of any security or plan. Investors should do their own study and think about their money situation, risk comfort, and investment goals before making any investment choices. Past results do not ensure future outcomes, and all investments have risk including possible loss of original money.
