Monolithic Power Systems Inc (NASDAQ:MPWR) has appeared as a noteworthy option for investors using a combined technical and fundamental method. The stock recently appeared through a screening process that joins Mark Minervini's Trend Template with a High Growth Momentum (HGM) rating, a plan made to find companies displaying both solid price momentum and sound underlying business growth. This dual-focus method aims to find stocks in clear uptrends that are also showing the financial features common of market leaders.
Technical Strength and Trend Template Alignment
The Minervini Trend Template offers a structured way to find stocks in a solid stage 2 uptrend, which is defined by continued upward momentum and relative strength. MONOLITHIC POWER SYSTEMS INC shows a very close fit with these technical standards, a main reason for its selection.
- Price Above Key Moving Averages: The current price of $1086.36 trades well above the rising 50-day ($917.67), 150-day ($757.91), and 200-day ($727.26) simple moving averages. This setup verifies the stock is in a bull market phase across multiple timeframes.
- Moving Average Alignment: The 50-day SMA sits above both the 150-day and 200-day SMAs, while the 150-day SMA is above the 200-day SMA. This ordered, rising formation is a typical sign of a strong uptrend and shows increasing momentum.
- Proximity to Highs: The stock is trading within 2.3% of its 52-week high of $1112.05, meeting the template's condition of being within 25% of the high. Stocks close to their highs frequently have the strongest momentum. Also, the current price is 147% above its 52-week low, well beyond the 30% minimum level and indicating a solid recovery and growth pattern.
- Superior Relative Strength: With a ChartMill Relative Strength rating of 88.91, MPWR is performing better than almost 89% of all stocks in the market. Minervini points out that high relative strength is a mark of market leaders, as it shows institutional demand and a greater chance of continued good performance.
Fundamentals Driving High Growth Momentum
Beyond a technically good chart, the Minervini method puts notable importance on fundamental health, especially increasing growth in earnings and sales. MONOLITHIC POWER SYSTEMS INC has a High Growth Momentum rating of at least 6, reflecting its sound financial performance, which is important for maintaining a strong price trend.
- Sound Earnings Growth: The company has shown notable earnings power, with EPS (TTM) growing 37.35% year-over-year. Quarterly EPS growth has been consistently solid, at 32.81% in the most recent quarter, after earlier quarters of 43.77% and 42.01%. This sequence of high, successive growth is a main feature looked for by growth investors.
- Notable Sales Expansion: Revenue growth is also noteworthy, with a 34.30% increase over the trailing twelve months. Recent quarterly sales growth has been 30.97%, following previous quarters of 39.24% and 36.93%. Solid and increasing sales growth verifies that demand for the company's power semiconductor solutions is healthy.
- Positive Earnings Revisions: Analyst opinion is improving, with the average EPS estimate for next year adjusted higher by 3.37% over the last three months. In the same way, revenue estimates for next year have been adjusted up by 3.39%. Such changes often come before continued fundamental strength and are a good factor for the stock price.
- History of Surprises: The company has exceeded EPS estimates in three of the last four quarters, with an average beat of 2.14%. It has also exceeded revenue estimates three times, with an average beat of 2.99%. A record of surpassing forecasts builds investor trust and can lead to higher valuations.
Technical Health Overview
The complete technical analysis report for MPWR gives a top rating of 10 out of 10, reflecting very good technical health. The report mentions a steady positive performance in both short-term and long-term trends. While the stock is technically very sound, the analysis also states that its recent changeable price movement may not offer a good low-risk entry point right now, indicating investors look for a period of consolidation. For a detailed look at the support levels and technical indicators, you can check the full technical report for MPWR.
Finding Similar Opportunities
MONOLITHIC POWER SYSTEMS INC is an example of the kind of company that can be found by concentrating on a disciplined, rules-based plan that combines technical trend with fundamental growth. For investors looking to find other stocks that meet these strict conditions, the screening process that found MPWR can be a useful instrument. You can look for more potential options 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 information provided should not be used as the sole basis for making any investment decision. You should consult with a qualified financial advisor and conduct your own research before making any investment.
