The method used to find possible investment choices joins a strict technical structure with attention to fundamental growth momentum. This process is guided by the organized plan of famous trader Mark Minervini, which stresses purchasing stocks already in strong upward moves that also have backing from improving business basics. The technical base uses Minervini's Trend Template, a list made to sort for stocks showing definite, multi-timeframe power. This is combined with a filter for strong growth momentum, looking for firms with outstanding and frequently speeding growth in earnings and sales. The aim is to locate securities where powerful price movement matches solid underlying business performance, possibly creating conditions for continued strong results.
Lumentum Holdings Inc (NASDAQ:LITE) appears as a choice that meets both the technical rules of the Trend Template and the strict needs of a high-growth outline. As a supplier of optical and photonic products, the company works in the center of cloud data center systems and communications networks, areas seeing major support from AI, machine learning, and data center link uses.
A Clear Trend Template Arrangement
A main idea of the Minervini view is to trade along the line of the set trend, staying away from the danger of trying to buy a declining stock. The Trend Template gives a definite, rule-based way to spot stocks in a confirmed Stage 2 rise. Lumentum's chart shows a strong case, fitting the main technical points:
- Moving Average Arrangement: The stock's price of $381.44 trades clearly above all main moving averages, the 50-day ($339.83), 150-day ($210.12), and 200-day ($175.66). Importantly, these averages are in the correct bullish order: the 50-day is above the 150-day, which is above the 200-day. Also, the 200-day moving average itself is in a continued upward move, having increased from about $174.00.
- Nearness to Highs: Lumentum is trading within 5% of its 52-week high of $402.80, showing the power and leading position Minervini looks for. It is also a large 735% above its 52-week low, proof of a strong recovery and upward move already happening.
- Better Relative Strength: With a ChartMill Relative Strength (CRS) score of 99.06, LITE is doing better than almost every other stock in the market. This outstanding relative strength is a sign of market leaders and a key filter in the Trend Template, pointing to institutional buying and momentum.
This technical view shows a stock in a strong, maintained upward move across all important timeframes, meeting the main requirement for more study under the Minervini structure.
Basics Supporting Strong Growth Momentum
While the Trend Template spots how a stock is moving, the high-growth momentum filter tries to know why. For Minervini, "big earnings draw big notice," and Lumentum's recent basic performance indicates it is getting that notice. The company's financial numbers show a story of fast speeding up:
- Earnings Growth Speeding Up: The year-over-year EPS growth has jumped quickly, changing from 31.25% three quarters ago to 511.11% in the newest quarter. This shape of sharp speeding up is a strong sign of getting better business conditions.
- Steady Earnings Surprises: The company has topped analyst EPS guesses in each of the last four quarters, with an average beat of 9.79%. This steady better-than-expected performance builds trust and can lead to positive changes.
- Upward Analyst Changes: Showing increasing belief, analysts have increased their earnings guesses for the next fiscal year by 17.65% over the past three months. Revenue guesses for next year have also been changed upward by 13.75%.
- Strong Sales Growth: Revenue growth has speeded up again in a notable way, from 9.65% three quarters ago to 58.44% in the latest quarter. This top-line strength gives a firm base for the bottom-line jump.
This mix of speeding earnings, steady beats, and rising analyst hopes forms the core of a high-growth momentum outline. It gives the basic "catalyst" that Minervini states often comes before and drives major price gains in technically sound stocks.
Technical Condition and Arrangement Review
Beyond the exact Trend Template, a wider technical study of Lumentum shows outstanding condition. The stock gets a complete ChartMill Technical Rating of 10/10, showing better performance across short and long-term trends and compared to the wider market. The long-term trend is labeled as positive, matching well with the current bullish period of the general market.
The technical statement notes that while the stock is in a strong upward move, its recent trading range has been broad. It indicates that a time of settling or a move back toward set support areas, like the zone between $339.83 and $342.37 made by main moving averages and trendlines, could give a more favorable risk/reward entry chance for new positions. A full list of support, resistance, and possible trade management levels is in the full Lumentum technical report.
Summary and More Study
Lumentum Holdings Inc shows a case where a sound technical trend, as described by the Minervini Trend Template, is being confirmed by a basic story of speeding high growth. The stock displays the price strength, relative leadership, and earnings momentum that organized plans often look for. While the present technical position is strong, investors should always think about their own risk limits, especially in a stock that has seen such a large gain.
For investors wanting to use this joined technical and growth momentum method to find similar chances, a preset screen exists. You can find more possible choices by looking at the 'High Growth Momentum + Trend Template' screen here.
Disclaimer: This article is for information and learning only. It is not advice to buy or sell any security. The study is based on given data and certain methods; past performance does not show future outcomes. Always do your own research and think about talking with a qualified financial advisor before making any investment choices. Please read our full disclaimer here.
