Investors looking for large returns often search for a specific mix of factors: a company with solid and speeding fundamental growth, paired with a stock price that is near a major technical move. This method tries to find businesses that are not only financially sound and growing but are also set to have that fundamental strength acknowledged in the market through a price breakout. The aim is to find chances where good business performance and positive market timing meet.
Mastercard Inc, A (NYSE:MA) offers a strong example for this method. As a worldwide technology company in the payments sector, its business model is fixed in the long-term move toward digital and cashless transactions. An examination of its fundamental and technical data indicates it may now match the description of a solid growth stock displaying a favorable technical arrangement.
Fundamental Strength: The Engine for Growth
The foundation of this method is finding companies with outstanding and lasting growth measures, backed by good profitability and a firm financial base. Mastercard's fundamental report, which you can examine fully here, shows a company performing well in these important areas.
- Outstanding Growth Path: Mastercard shows forceful revenue and earnings growth. In the last year, Revenue grew by 16.42% and Earnings Per Share (EPS) rose by 16.50%. More notably, the 5-year average yearly growth rates are even better, at 16.47% for Revenue and 21.49% for EPS. This steady, double-digit growth is a main sign of a standard growth stock.
- High Profitability: The company does not only grow, it does so with notable efficiency. Its Return on Invested Capital (ROIC) of 51.15% and Return on Equity (ROE) of 193.46% are near the top in its field, showing skilled capital use. Also, its Operating Margin is at a solid 59.37%. These measures highlight a wide economic moat and a very scalable business model.
- Solid Financial Health: A growth story is only lasting if the company's balance sheet can back it. Mastercard receives a high Health rating, marked by a strong Altman-Z score showing no bankruptcy danger and a very low Debt-to-Free Cash Flow ratio, meaning it could clear all its debt in just over a year from its cash flow. This financial steadiness gives a buffer during economic shifts and means for future spending.
Valuation and Technical Context
While the growth and profitability are clear, the method also needs a review of price. Mastercard trades at a high valuation, with a P/E ratio above its field average. However, this is partly reasoned by its excellent growth rates and profitability, as shown by a neutral PEG ratio which includes that growth. The present price shows the market's recognition of its quality, creating the conditions for the technical study.
The technical view, explained in the full report here, is where the "setup" part becomes relevant. Even with a negative short- and long-term trend rating, the study points to a possibly helpful pattern.
- Consolidation and Support: The stock has been trading in a broad range over the last month, showing signs of lower volatility and consolidation. This often happens before a clear price move.
- Important Resistance and Support Levels: A major resistance zone is present between about $538 and $554, made by a mix of trendlines and moving averages. On the other hand, a firm support zone has been formed between $520 and $533. The stock is now trading near the middle of this range, having recently checked the support area.
- The Setup Possibility: The technical report states that this price action has formed a "good setup pattern." The idea is that if the stock can gain enough force to move through the overhead resistance zone, it could mark the start of a new upward trend, possibly matching the wider market's performance.
Why This Combination Matters
This combined method is effective because it deals with both the "what" and the "when." The fundamental study confirms what you are buying: a financially sound company with a tested growth engine in a growing global market. The technical setup study suggests a possible answer for when to take note, finding a point where the stock's price may be set to show that basic business strength. It tries to avoid buying a declining stock in a downtrend while placing for a momentum change.
For investors wanting to review other companies that fit this particular mix of solid growth fundamentals and favorable technical patterns, more results from this screening approach can be found here.
Disclaimer: This article is for information only and does not make up financial advice, a suggestion, or an offer to buy or sell any security. Investing has risk, including the possible loss of principal. You should do your own study and talk with a qualified financial advisor before making any investment choices.
