MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) has appeared as a candidate for investors using a disciplined growth and momentum strategy. This method, made known by trader Mark Minervini, joins strict technical and fundamental study to find stocks with the possibility for major price gains. The central idea is to concentrate on companies already showing forceful earnings and sales growth, and to time entries when the stock's price movement shows a definite, low-risk move out from a consolidation pattern. This technique aims to seize the strong middle part of a stock's rise, giving priority to solid trends, quickening fundamentals, and exact entry points to handle risk.
Meeting the Minervini Trend Template
The first part of this strategy is confirming a stock is in a verified, long-term uptrend. Minervini's Trend Template gives a fixed group of technical filters, and MTSI at this time fits these important conditions:
- Trend Alignment: The stock's price is trading above its important rising moving averages (50-day, 150-day, and 200-day), with the shorter-term averages ordered above the longer-term ones. This order shows continued buying pressure across several timeframes.
- Proximity to Highs: MTSI's present price is more than 30% above its 52-week low and stays within 25% of its 52-week high of $190.95. This concentration on strength, instead of looking for greatly reduced "bargains," is key to the momentum thinking, as stocks close to highs frequently have the most direct route for more progress.
- Market Leadership: With a ChartMill Relative Strength (CRS) ranking of 89, MTSI is doing better than almost 90% of all stocks in the market. High relative strength is a required filter in the Minervini system, as it finds the market leaders most probable to keep doing better during a bullish period.
These technical situations propose MTSI is in a sound Stage 2 rise, the main phase where the strategy aims to invest.
Fundamentals Supporting High Growth Momentum
The technical strength is supported by a fundamental profile that shows the quickening growth path looked for by high-growth investors. The "High Growth Momentum" rating screen checks several important measures, and MTSI's numbers tell a persuasive story:
- Earnings Acceleration: The company is showing forceful and quickening earnings growth. Year-over-year EPS growth has jumped from 36.7% three quarters ago to 44.1% two quarters ago, and came to a still-strong 28.8% in the newest quarter. This sequence of solid, consecutive growth is a sign of companies gaining operational speed.
- Strong Sales Expansion: Revenue growth is similarly notable, regularly coming in above 30% year-over-year for the past few quarters. This top-line strength gives a firm base for bottom-line earnings growth and shows high demand for MACOM's semiconductor solutions.
- Improving Profitability: Beyond just growing sales, the company is becoming more profitable. The profit margin has grown consecutively over the last two reported quarters, from 13.4% to 14.5% and most newly to 17.3%. Improving margins show pricing ability and operational effectiveness, which can meaningfully increase earnings growth as revenue gets bigger.
- Analyst Confidence: The trend is getting confirmation from Wall Street. Analysts have increased their earnings estimates for the next fiscal year by over 3% in the last three months, a positive revision trend that often comes before more price strength.
This mix of explosive earnings growth, solid sales speed, and growing margins makes the fundamental "catalyst" that Minervini's strategy looks for to push a stock higher.
Technical Setup and Risk Considerations
According to ChartMill's own analysis, MTSI at this time has a firm Technical Rating of 7, showing its overall sound trend. The Setup Quality rating is a 6, meaning the stock is consolidating inside its larger uptrend, which can come before a new directional move. The technical report finds a definite support area around $168.30, which is strengthened by the rising 50-day moving average. A clear move above recent resistance could indicate the next step up, while a break of that support area would propose a need for the trend to recover.
For a detailed study of the stock's support and resistance levels, together with specific trade setup possibilities, you can examine the full technical analysis report for MTSI.
Conclusion
MACOM Technology Solutions presents a case that fits with the ideas of growth and momentum investing. It meets the strict technical needs of the Minervini Trend Template, confirming its part in a long-term uptrend and market leadership. Fundamentally, the company is producing the kind of quickening earnings and sales growth, joined with margin growth, that high-growth investors aim for. While the stock is at this time absorbing its recent gains close to the higher end of a trading range, its basic technical and fundamental position makes it a notable candidate for investors following this disciplined method. As always, such strategies depend on exact entry points and strict risk management to handle volatility.
Interested in finding more stocks that fit this high-growth, momentum profile? You can run the same screening method using this High Growth Momentum + Trend Template screen.
,
Disclaimer: This article is for informational and educational purposes only. It is not intended as investment advice, nor does it constitute a recommendation to buy, sell, or hold any security. The analysis is based on data provided and screening methodologies described, which are subject to change. Always conduct your own due diligence and consider consulting with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.
