For investors aiming to profit from market trends, a method that joins sound core business traits with positive technical price formations can be an effective tactic. This process centers on finding firms displaying solid growth, good profitability, and sound finances, key signs of a durable business, while also locating stocks where the price movement indicates a possible rise from a period of sideways trading. This combination seeks to locate prospects where core strength might be close to gaining notice and showing in the stock price.
Neurocrine Biosciences Inc (NASDAQ:NBIX) offers an interesting example for this method. As a biopharmaceutical firm centered on neuroscience, its marketed products and research target neurological and neuroendocrine conditions, a sector with considerable unaddressed demand and lasting expansion possibility.
Fundamental Strength: The Growth and Quality Base
A close look at Neurocrine's fundamentals shows a firm with outstanding operational results, which is the first important step in this method. Per its fundamental analysis report, the firm gets a high total score of 7 out of 10, with excellent marks in main growth and quality measures.
Growth Path:
- Revenue Growth: The firm has shown strong top-line increase, with revenue rising 19.61% in the last year and at a typical yearly pace of 24.48% over recent years.
- Earnings Power: Earnings Per Share (EPS) growth is more notable, typically 58.39% each year in the past. Analysts are positive on future earnings, projecting EPS to rise by a typical 32.54% in the next years.
Profitability and Financial Soundness:
- High Margins: Neurocrine works with sector-top margins, including a Gross Margin of 98.37% and an Operating Margin of 20.64%, doing better than over 95% of its biotechnology counterparts.
- Sound Returns: The firm produces notable returns on its capital, with a Return on Invested Capital (ROIC) of 11.10% and a Return on Equity (ROE) of 14.25%, putting it in the top group of its industry.
- Solid Balance Sheet: A major positive is its clean balance sheet. The firm has no debt, giving great financial room and stability. This leads to a sound Altman-Z score of 8.12, showing very low bankruptcy chance.
This mix of fast growth, top profitability, and a debt-free financial position forms a fundamentally good base, which is needed for maintaining trends and handling market swings.
Technical Setup: Placed for a Possible Rise
While the fundamental view is sound, the technical study shows a stock that has been trading sideways and could be getting ready for its next price move. The technical analysis report states that despite poor short- and long-term trends, NBIX shows an interesting setup chance with a score of 8 out of 10 for its formation.
Main Technical Notes:
- Sideways Trading Phase: The stock price has been moving in a set band, forming a base after its prior activity. This time of sideways trading often comes before a notable rise.
- Set Support and Resistance: A clear support area is seen between $132.25 and $135.62, made by a meeting of trend lines and moving averages. Above, a resistance area lies between $153.14 and $155.64.
- Setup Chance: The study finds that with "very little resistance above the current price" and a set support area below, the chart formation presents a possible chance. The recent decline could be making a base from which the next upward move might start, particularly if the fundamental strengths start to attract more investor focus.
Why This Mix Is Important
The method's central idea is that a strong technical rise is much more probable to be maintained and result in large gains if the firm has the fundamental capacity to support higher prices. A rise in a poor firm can swiftly fall back, turning into a false signal. In Neurocrine's situation, the fast historical growth, top profitability, and very solid balance sheet give the force that could drive a technical rise into a kept upward trend. The market might be giving a chance to take a position in a good quality growth stock before it leaves its present sideways phase.
Conclusion
Neurocrine Biosciences shows the kind of chance looked for by a joined fundamental and technical method. The firm is not only a tale of possibility; it is a commercially effective entity with confirmed, high-margin growth and a very sound financial state. This fundamental quality is now paired with a technical chart formation indicating the stock is tightening within a base, possibly preparing for its next move higher. For investors, this shows a situation where business quality and market timing might come together.
Interested in locating more stocks that match this profile of solid growth joined with positive technical setups? You can search more by using the set Strong Growth Stock Technical Setups screen.
Disclaimer: This article is for information only and does not form financial advice, a suggestion, or a deal to buy or sell any securities. The study is based on data and reports thought to be dependable, but its correctness cannot be assured. Investing in stocks includes risk, including the possible loss of capital. Always do your own complete research and think about your personal financial position and risk comfort before making any investment choices.
