For investors aiming to use the momentum of high-performing companies, a mixed method of technical and fundamental study can be a useful instrument. One particular tactic involves filtering for solid growth stocks that are also showing encouraging technical breakout formations. The reasoning is simple: find companies with sound basic business condition and speeding earnings, the signs of a standard growth stock, and then look for those where the price movement indicates a possible extension of the upward trend. This technique tries to match a company's fundamental momentum with favorable market feeling, possibly finding chances where solid business results is starting to be seen, or may keep being seen, in the share price.
NVIDIA CORP (NASDAQ:NVDA) appears as a leading example from this kind of filtering. The semiconductor leader, a frontrunner in graphics processing units (GPUs) and accelerated computing for artificial intelligence and data centers, offers a strong case when examined through this combined view.
Fundamental Strength: The Basis for Growth
The basic attraction of NVIDIA is found in its outstanding fundamental picture, which matches exactly with the central idea of growth investing: finding companies predicted to increase much quicker than similar companies. ChartMill's fundamental analysis report gives NVIDIA a total score of 9 out of 10, with high marks in important growth and profit measures.
- Outstanding Growth Measures: NVIDIA's growth score is a notable 9. The company has shown very fast increase, with Revenue increasing 65.47% and Earnings Per Share (EPS) increasing 64.77% over the previous year. Even more notable are the multi-year averages, with revenue increasing at 66.90% and EPS at 81.58% each year. While future growth is predicted to slow from these very high levels, experts still estimate solid yearly growth of 25.75% in revenue and 21.90% in EPS.
- Top-Level Profitability: With a complete profitability score of 10, NVIDIA works at efficiency levels that are the goal of its field. Important measures highlight this leadership:
- Profit Margin: 55.60%
- Operating Margin: 60.62%
- Return on Invested Capital (ROIC): 64.32%
- Very Strong Financial Condition: A condition score of 9 points to a very secure financial position. The company has a solid current ratio of 3.91, very little debt (Debt/Equity of 0.05), and an Altman-Z score of 58.66, which shows a very small chance of financial trouble. This financial strength gives the company the means to keep putting large amounts into new ideas and R&D, an important non-number factor for keeping its leading position in a tech field that changes often.
This fundamental view satisfies the number-based requirements for a solid growth stock: better sales and earnings speed, high profit, and a sound financial position that can support future increase.
Technical Picture: Matching Price with Results
While fundamentals explain the company's basis, technical study evaluates the market's present view of the stock. According to ChartMill's technical analysis report, NVIDIA shows a "acceptable setup formation" with a setup score of 7. This indicates the stock's price movement may be getting ready for a possible next step.
The report states that after a large rise over the past year (doing better than 87% of all stocks), NVIDIA's price has been moving within a band over the last month. This time of lower change and side-to-side movement often comes before a clear breakout. The technical setup finds close resistance and support levels, giving a structure for judging the stock's next price move. The existence of a clear setup formation is key for the tactic, as it looks for stocks where solid fundamentals are paired with a technical position that indicates building or positive momentum, instead of a stock that is technically stretched or falling.
Price and Market Setting
NVIDIA's price is a detailed subject. Its Price-to-Earnings (P/E) ratio of 37.19 seems high next to the wider S&P 500 average. However, inside its own high-growth semiconductor field, the price is more acceptable. More significantly, the company's very high growth rates and field-leading profit give important setting. The report notes that NVIDIA's low PEG ratio, which includes earnings growth, and its exceptional profit may support its higher price for growth-focused investors. In a market where the S&P 500's long-term direction is negative but its short-term direction is positive, finding single stocks with their own positive momentum and fundamental reason becomes even more important.
Summary
NVIDIA CORP shows the kind of company sought by a mixed growth and technical breakout tactic. Its fundamental report shows a growth leader with top-level profit and financial condition, meeting and passing the number-based needs for a lasting growth investment. At the same time, its technical report shows the stock is coming out of a period of moving within a band, presenting a clear setup that traders watch for a possible extension of its long-term upward trend. This combination indicates a company whose exceptional business results may be ready to show again in its share price movement.
Interested in finding more stocks that match this description? You can use the "Strong Growth Stocks with good Technical Setup Ratings" filter yourself to look at other possible chances. View the filter and its present results here.
Disclaimer: This article is for information only and does not make up financial guidance, a suggestion, or a bid or request to buy or sell any securities. The study shown is based on information and reports from ChartMill.com and should not be the only reason for any investment choice. Investing in stocks includes risk, including the possible loss of the original amount. Always do your own complete study and think about talking with a registered financial guide before making any investment choices. Past results are not a sign of future results.