Lemonade Inc (NYSE:LMND) Shows High-Growth Momentum and Strong Technical Trend

Lemonade Inc (NYSE:LMND) has recently appeared on a specific stock screen made to find companies that fit Mark Minervini's strict Trend Template while also showing the fundamental traits wanted by high-growth momentum investors. This two-part method joins a disciplined technical analysis structure with a concentration on companies showing speeding up business fundamentals, trying to spot stocks that are not only in strong uptrends but are also backed by solid underlying growth.

Technical Strength: Following the Minervini Trend Template

Mark Minervini's Trend Template is a step-by-step way to identify stocks in a confirmed and strong stage 2 uptrend. The template uses a set of strict technical rules to remove weak stocks and concentrate only on market leaders. A detailed examination of Lemonade shows it currently meets the main principles of this model.

The stock's price action and moving average setup are especially notable:

• Price Above Key Moving Averages: The current price of $78.12 trades well above the rising 50-day ($60.81), 150-day ($48.53), and 200-day ($44.50) simple moving averages (SMAs). This arrangement confirms the stock is in a confirmed uptrend across several timeframes.
• Positive Moving Average Alignment: The 50-day SMA is positioned above both the 150-day and 200-day SMAs, and the 150-day SMA is above the 200-day SMA. This sequential, rising order of moving averages is a classic sign of a strong bullish trend, showing that buying pressure has been steady and continued.
• Proximity to Highs: At its current level, LMND is trading within 7% of its 52-week high of $83.77, easily meeting the Trend Template's rule of being within 25% of the high. At the same time, the stock price is more than 220% above its 52-week low of $24.31, greatly exceeding the 30% requirement. This shows notable momentum and an absence of overhead supply from investors who purchased at higher prices.
• Superior Relative Strength: With a ChartMill Relative Strength (CRS) rating of 93.23, LMND is performing better than 93% of all stocks in the market. More notably, it performs better than 98% of its peers in the Insurance industry. Minervini states that true market leaders almost always have high relative strength, as it points to institutional accumulation and better performance.

Fundamental Momentum: The Signs of High Growth

For a stock to be more than just a technical breakout and have the energy for a continued advance, Minervini's SEPA® method highlights the importance of strong and speeding up fundamentals. The "High Growth Momentum" part of the screen focuses on these exact qualities, and Lemonade shows several positive metrics.

The company is displaying noticeable speeding up in its main financial metrics:

• Earnings Acceleration: While the company is not yet profitable on a net income basis, the path of its losses is getting much better. The EPS growth on a trailing twelve-month (TTM) basis is 21.38%. More significantly, the most recent quarterly EPS growth jumped 46.32% compared to the same quarter last year, showing a notable speeding up in its path to profitability.
• Consistent Earnings Surprises: LMND has exceeded analyst EPS estimates in all of the last four quarters, with an average surprise of 24.29%. This steady overperformance often works as a catalyst, making institutional investors reassess their growth models and causing price re-ratings.
• Strong and Speeding Up Revenue Growth: Revenue growth remains strong, with TTM growth at 33.54%. The growth rate has sped up noticeably, with the latest quarter showing a 42.39% year-over-year increase. This speeding up is a vital factor for momentum investors, as it implies the company is gaining market share and growing effectively.
• Positive Analyst Revisions: Analysts have been increasing their estimates, a key factor Minervini calls a "fundamental catalyst." The average EPS estimate for the next fiscal year has been moved up by 1.90% over the last three months, showing increasing confidence in the company's future earnings potential.

Technical Analysis Overview

The detailed Technical Analysis Report for LMND gives the stock a top rating of 10 out of 10, reflecting outstanding technical health. The report confirms both the short-term and long-term trends are positive and notes that the stock is a leading performer within its industry. The main point of caution from the report relates to the setup quality, which is rated a 4. This shows that while the stock is technically excellent, its recent sharp price rise has made locating a low-risk entry point difficult. The report indicates that waiting for a time of consolidation or a move back toward confirmed support levels, like the area around $67.07, would be wise before thinking about a new position.

A Method for Locating Similar Opportunities

The pairing of a Minervini-qualified trend and high-growth fundamentals makes LMND a notable candidate for more study. For investors looking to systematically locate other stocks that match this particular profile, the predefined screen that found Lemonade is a useful tool.

You can find more possible candidates that meet these strict technical and fundamental growth requirements by using the High Growth Momentum + Trend Template screen on ChartMill.

Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice of any kind. The analysis of Lemonade Inc. (LMND) is based on publicly available data and a specific screening methodology. You should not construe any such information as legal, tax, investment, financial, or other advice. All content provided is impersonal and not tailored to any individual's specific investment needs. Please read our full disclaimer for more details.