Lumentum Holdings Inc (NASDAQ:LITE) Combines High-Growth Momentum with Bullish Technical Setup

For investors looking to join strong earnings momentum with good chart patterns, a plan centered on high growth momentum and technical formations can be an effective method. This process looks for stocks showing forceful short-term earnings speed, favorable estimate changes, and growing profit margins, important parts of high-growth investing. At the same time, it needs the stock to show a sound basic technical direction and a helpful price pause, indicating a possible breakout moment. This two-part screen tries to find companies where basic momentum matches a technically good entry point.

Lumentum Holdings Inc (NASDAQ:LITE) appears as a choice that fits these joined standards, making an argument for both its growth path and its chart formation.

High Growth Momentum Basics

The heart of the high-growth momentum plan is finding companies with speeding business results. Lumentum's recent financial reports show several signs that add to its firm rating in this group.

• Outstanding Earnings Growth: The company has shown very fast year-over-year earnings per share (EPS) growth in recent quarters. The latest quarter saw EPS jump by 511.1%, after an even more striking 1,366.7% growth in the quarter before. This speed increase is a main force for momentum investors.
• Forceful Revenue Growth: Top-line growth has also been solid, with sales rising by 58.4% in the last quarter. Analysts predict this momentum to keep going, with next-quarter sales growth projected at 64%.
• Favorable Analyst View: The view from Wall Street has gotten better, with analysts changing their average EPS guess for the next year higher by over 17% in the last three months. Such good changes often come before more price gains as hopes are set higher.
• Steady Earnings Beats: Lumentum has topped EPS guesses in each of the last four quarters, with an average beat of 9.8%. This history of beating guesses creates trust and can support investor belief.

While the company's free cash flow has been negative over the past twelve months, the very great force in operational earnings growth, sales speed, and good estimate changes forms a convincing basic picture for momentum-centered investors.

Technical Force and Formation Quality

A strong basic story is best matched with a helpful price chart. According to ChartMill's detailed technical report, Lumentum gets a perfect 10 out of 10 for its Technical Rating, showing very good technical condition.

• Forceful Long-Term Direction: The long-term direction is firmly positive, with the stock price trading well above its important moving averages (50-day, 100-day, and 200-day). It has done better than 98% of all stocks in the market over the last year.
• Industry Outperformance: Inside the competitive Communications Equipment field, Lumentum is a top performer, doing better than 95% of its similar companies.
• Helpful Pause: Even with the strong longer-term upward direction, the stock has been pausing in a range over the last month. This stop has let it work off any overbought state and form a new base of support. This action is seen in its Setup Rating of 7, which names the current pattern as a possible breakout formation.
• Clear Risk Management Points: The technical study finds a support area between $320.94 and $324.24, made by a coming together of moving averages and trendlines. For a trader, this gives a sensible area to put a stop-loss order if the expected breakout does not happen.

The pairing of a top-level technical rating with a good setup score implies the stock is both in a sound trend and may be tightening for its next price move. This matches well with the plan's aim of entering high-momentum stocks at good technical spots, instead of following extended prices.

A Plan in Use

The screening reason that found Lumentum, filtering for high growth momentum, strong technicals, and a quality formation, serves a particular goal. The high growth momentum score makes sure the company has the basic "fuel" for a continued move. The technical rating confirms the market is already seeing this force with a current upward direction. Lastly, the setup rating helps find a time of short balance inside that trend, giving a specific entry point with workable risk. Lumentum's profile across these three measures shows how the plan is made to work in use.

For investors wanting to look into other stocks that now fit this specific mix of high-growth basics and hopeful technical formations, more study can be done using the set screen: High Growth Momentum Breakout Setups.

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Disclaimer: This article is for information only and does not make up investment advice, a suggestion, or an offer to buy or sell any security. The study is based on given data and shows conditions at a specific time. Investing includes risk, including the possible loss of principal. Always do your own study and think about talking with a qualified financial advisor before making any investment choices.