In the search for high-potential growth stocks, a method using both technical and fundamental analysis can be very effective. One recognized method is Mark Minervini’s SEPA (Specific Entry Point Analysis) strategy, which aims to locate stocks showing strong uptrends, excellent fundamentals, and clear catalysts shortly before they experience large price advances. A useful way to use this is by first finding stocks that pass Minervini’s strict Trend Template, a group of technical rules verifying a stock is in a definite, strong uptrend, and then adding fundamental filters to verify solid and speeding growth. This two-part method helps find companies that are not only market leaders from a price view but are also supported by strong business performance, identifying them as possibilities for high-growth investors.
A Classic Trend Template Example
A central idea of the Minervini strategy is to invest only in stocks that are already in a clear and strong Stage 2 uptrend, as described by his Trend Template. MODINE MANUFACTURING CO (NYSE:MOD) currently offers a strong case that it passes these strict technical rules. The template's rules are made to select for clear strength and agreement across different time periods.
- Moving Average Agreement: The stock’s price is trading well above all its main simple moving averages (SMAs). Importantly, the shorter-term averages are above the longer-term ones, verifying the trend's strength and speed. Specifically, the 50-day SMA ($198.16) is above both the 150-day ($163.12) and 200-day ($150.04) SMAs, and the 150-day SMA is also above the 200-day SMA. Also, the 200-day SMA itself is in a definite uptrend.
- Nearness to Highs: Minervini stresses focusing on strength, not low price. MOD is trading within 12% of its 52-week high of $243.80, easily within the template's rule of being within 25% of the high. At the same time, its current price is over 230% above its 52-week low, greatly passing the 30% level, which shows a strong recovery and continued momentum.
- Better Relative Strength: Possibly most revealing is the stock’s ChartMill Relative Strength (CRS) of 97.64. This means MOD’s price performance over the past year has been better than almost 98% of all stocks. Within its Building Products industry, it performs better than 100% of similar companies. This outstanding relative strength is a sign of market leadership, a trait Minervini constantly looks for.
Passing all these rules indicates MOD is not only in an uptrend, but is one of the top stocks pushing that trend—a main goal for the SEPA strategy.
Fundamentals That Show High Growth Speed
While the Trend Template finds the "when," the "why" is frequently found in the fundamentals. For a stock to be a choice for high-growth investing, it must show speeding business results. MOD’s recent financial numbers indicate it is in the middle of a notable growth period.
- Earnings Speed Increase: A main sign in growth investing is not only growth, but a rise in the speed of growth. MOD shows clear proof of this. While year-over-year EPS growth has been good, the most recent quarterly EPS growth of 29.35% shows a notable speed increase from the 9.28% and 1.92% growth seen in the two earlier quarters. This pattern of speeding earnings again is just what growth investors and methods like Minervini’s search for, as it often comes before renewed institutional interest and price momentum.
- Steady Earnings Surprises: The company has passed analyst EPS estimates in each of the last four quarters, with an average pass of over 13%. This steady history of beating expectations creates trust with investors and can be a reason for multiple growth.
- Good Sales Growth and Forecast: Top-line growth stays solid, with the last quarter showing sales growth of over 30% year-over-year. Also, analyst feeling is positive, with upward changes to both next-quarter and next-year estimates over the past three months. This improving forecast provides a fundamental reason that matches the stock’s technical strength.
Technical Condition and Present Position
According to ChartMill’s own analysis, MOD receives a nearly perfect Technical Rating of 10 out of 10, showing excellent condition across short and long-term trends. The long-term trend is positive, and the stock performs much better than the wider market. However, the analysis also notes a Setup Rating of 5, showing that while the stock is technically excellent, it is currently in a wide trading range and may be stretched from its most recent period of stability. For a Minervini-style entry, this indicates waiting for a new, tighter volatility contraction pattern (VCP) to form, giving a lower-risk, specific entry point. The full technical report, listing support and resistance levels, can be seen here.
Summary
MODINE MANUFACTURING CO shows a strong profile for investors using a high-growth momentum method based on Mark Minervini’s ideas. The stock meets the strict technical list of the Trend Template, verifying it is a market leader in a strong uptrend. This technical strength is supported by fundamental numbers that show speeding earnings, steady positive surprises, and good sales growth—all signs of a company with high-growth momentum. While the present chart suggests waiting for a better entry point, MOD shows the kind of stock where technical momentum and fundamental gain meet.
Want to find more stocks that match this high-growth momentum and Trend Template profile? You can examine the preset screen used to find MOD and see other possible choices by using this link: High Growth Momentum + Trend Template Screen.
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Disclaimer: This article is for informational and educational purposes only. It is not intended as investment advice, a recommendation to buy or sell any security, or a guarantee of future performance. All investing involves risk, including the potential loss of principal. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.