Investors looking to find high-potential stocks often use systematic methods that mix strict technical study with basic growth measures. One well-known method is the strategy made popular by Mark Minervini, which focuses on finding stocks in strong uptrends with quickening business basics. This method uses a specific "Trend Template" to sort for technically good charts and pairs it with filters for high-growth momentum to confirm the main company is showing solid operational results. The aim is to locate securities where an interesting technical pattern is backed by solid and getting better earnings and sales trends, forming a possible combination for major price gains.
LIVE OAK BANCSHARES INC (NYSE:LOB) has recently appeared on a filter made to find these chances, fitting the two conditions of the Minervini Trend Template and a high-growth momentum score. This indicates the stock may deserve more study from growth-focused investors.
Fitting the Minervini Trend Template
The Minervini Trend Template is a group of fixed technical rules made to sort for stocks in clear, lasting uptrends. It goes past simple price gains to check the order of important moving averages and relative strength. For LOB, the present technical view matches these needs:
- Price Above Important Moving Averages: The stock's present price is trading well above its 50-day ($37.15), 150-day ($35.01), and 200-day ($33.41) simple moving averages (SMAs). This order is a basic part of the template, showing continued buying interest across several time periods.
- Positive Moving Average Directions: Importantly, these moving averages are not just price points but are themselves moving up. The increasing 200-day SMA, especially, confirms a good long-term direction, a main part of Minervini's stage study which concentrates on investing during the "Stage 2" rising phase.
- Nearness to Highs: LOB is trading within 6% of its 52-week high of $42.89 and is about 79% above its 52-week low. The template prefers stocks close to new highs, working on the idea that strength leads to more strength, instead of trying to find a bottom.
- Better Relative Strength: With a ChartMill Relative Strength (CRS) score of 83.29, LOB is doing better than most of the market. High relative strength is a main rule of the strategy, as it finds market leaders that often keep leading during good market times.
This technical match suggests LOB is in a clear uptrend with big investor backing, meeting the first main part of the Minervini method.
Basics Backing High-Growth Momentum
While a strong chart is needed, Minervini's strategy gives the same weight to basic acceleration, the thought that the largest stock market winners are pushed by strong earnings and sales growth. The filter that found LOB also needed a high Growth Momentum rating, which judges the speed and quality of a company's financial growth. LOB's recent basics show several signals of this acceleration:
- Large Recent Earnings Growth: The newest quarterly EPS grew by a very large 331.8% compared to the same quarter last year. While this is a high number, it is also part of a wider recovery direction, with the quarter before showing 96.4% growth. This kind of step-by-step gain in growth rates is a clear signal of basic momentum that the strategy looks for.
- Solid Yearly Profit Growth: On a trailing twelve-month (TTM) basis, earnings per share have grown by over 53%. This shows that the recent quarterly strength is adding to major yearly growth.
- Solid and Quickening Revenue: Sales growth is also strong, with the last quarter up 35.0% year-over-year. This top-line growth gives a firm base for the bottom-line growth and shows good business demand.
- Growing Profit Margins: The company's profit margin in the last reported quarter was 17.5%, showing a clear growth from 7.7% two quarters before. Getting better margins point to operational efficiency and pricing ability, which are signs of a high-quality growth business.
These measures show that LOB's price strength is not happening alone but is joined by a real and sharp gain in its main business results, the exact mix looked for by growth momentum filters.
Technical Condition and Pattern Summary
A look at the detailed ChartMill Technical Report for LOB gives a full picture of its technical condition. The report gives LOB a high technical rating of 9 out of 10, noting its steady good directions across both short and long-term time periods. The study states the stock is now showing a bull flag pattern, a pause pattern that can sometimes come before a continuation of the earlier uptrend. Important support is found in the $39.84-$40.21 area, which could work as a sensible place for risk control. While the pattern rating is a middle 5, the whole technical view, paired with the basic momentum, makes a case for more study.
Locating Like Chances
LOB shows the kind of candidate that comes up when using a strict, two-part filter for trend and growth. For investors wanting to study other stocks that now fit similar rules of the Minervini Trend Template paired with high-growth momentum, more results can be found using this specific High Growth Momentum + Trend Template screen.
Disclaimer: This article is for information and learning only. It is not a suggestion to buy or sell any security. The study is based on given data and specific filter rules. All investing has risk, including the chance of losing the original amount. You should do your own complete research and think about talking with a qualified financial advisor before making any investment choices.
