For investors aiming to join strict technical rules with a focus on fundamental growth, the method made famous by Mark Minervini offers a strong framework. This method rests on two main parts: the Trend Template, a group of technical rules meant to spot stocks in strong, confirmed uptrends, and a focus on firms showing solid and quickening earnings and sales momentum. The aim is to locate market leaders early in their big price rises by making sure they are technically healthy and fundamentally sound. A recent filter using these ideas has pointed to LSB Industries Inc (NYSE:LXU) as a candidate for more study.
Technical Base: Following the Minervini Trend Template
The Minervini Trend Template is a basic filter that removes weak or consolidating stocks to concentrate only on those showing clear institutional buying and upward momentum. For a stock to pass, it must satisfy a list of specific moving average and price performance rules. LSB Industries now fits this template, giving a technically positive picture.
- Trend Position: The stock is priced above all its main simple moving averages (SMAs), the 50-day ($9.21), 150-day ($8.69), and 200-day ($8.42). Importantly, the longer 150-day and 200-day averages are both increasing, confirming a continued positive long-term trend.
- Momentum Arrangement: The shorter 50-day SMA is placed above both the 150-day and 200-day SMAs, a positive arrangement that shows quickening intermediate-term momentum.
- Nearness to Highs: The present price is about 102% above its 52-week low of $4.88, showing major recovery force. Also, it is priced within 5.3% of its 52-week high of $10.405, a trait of leading stocks that often reach new highs.
- Relative Strength: With a ChartMill Relative Strength (CRS) score of 70.21, LXU is doing better than most of the wider market. Minervini notes that real leaders often have RS scores above 70, ideally in the 80s or 90s, as it shows the stock is wanted even when the general market shifts.
This combination of technical points indicates LXU is in a confirmed Stage 2 uptrend, the main phase where Minervini’s plan aims to take part.
Fundamental Momentum: The High-Growth Reason
While the Trend Template spots the "how" of a stock's price action, the "why" is frequently seen in its fundamental results. The High Growth Momentum (HGM) part of the filter looks for firms showing strong earnings and sales acceleration, which usually works as the driver for continued price gains. LSB Industries shows a number of these high-growth traits.
- Earnings Quickening: The latest quarterly EPS increased by a notable 127.7% year-over-year. This comes after a time of change, but such a strong positive shift is a main signal Minervini searches for, pointing to a possible fundamental change or cycle improvement.
- Analyst Positive View: The average analyst guess for next year's EPS has been raised by more than 14% in the past three months. Upward changes are a vital part, as they show increasing belief in the company's future earnings and often come before institutional purchasing.
- Sales Growth Re-acceleration: After many quarters of small growth, last quarter's sales jumped 42.3% compared to the same time last year. This re-acceleration in top-line growth is a solid positive sign, especially when joined with growing earnings.
- Estimate Beat Record: The company has topped consensus EPS guesses in three of the past four quarters, with an average beat of 51.5%. A steady record of beating guesses builds trust and can push valuation multiples higher.
These measures suggest the company is going through a strong fundamental rise, giving the needed driver that, when paired with a positive technical arrangement, can support major price trends.
Technical Condition and Setup Review
Beyond the exact Trend Template, ChartMill’s own study gives a wider look at the stock's technical condition and trade setup possibility. The system gives LSB Industries a Technical Rating of 7 out of 10, seeing a fair performance across short and medium-term periods with both trends rated as positive. The stock is trading in the higher part of its yearly range, though it is seen as a bit behind the S&P 500, which is near highs.
The Setup Quality rating is 6, pointing to a fair, though not ideal, consolidation shape. The study notes that LXU has been trading in a band between about $9.07 and $10.40 over the past month and is now consolidating in the middle of this range. This offers a possible entry chance, with noted support areas below the present price. For a complete look at support, resistance points, and a sample trade setup, readers can see the full technical report for LXU.
Sector Setting and Final Points
LSB Industries works in the Chemicals sector, supplying needed products for farming, industrial, and mining markets. Its recent fundamental jump may be connected to cyclical demand factors or operational gains. While its technical picture is healthy and growth measures are showing positive signs, investors should know the natural instability in commodity-linked businesses. The positive profit margin in the last quarter (4.58%) is a gain, but watching the continuation of this margin growth will be important.
Find More Possible Candidates The pairing of Minervini's strict trend-following and high-growth momentum filtering can reveal strong investment ideas. LSB Industries stands for one such result from this disciplined process. For investors wanting to look at other stocks that now fit these paired rules, you can run the live filter yourself through this link: 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 present data and a specific investment method. All investing has risk, including the possible loss of original money. You should do your own research and think about talking with a qualified financial advisor before making any investment choices.
