Investors looking to find stocks that may see large price gains frequently use methods that join strict technical study with basic growth measures. One method is supported by Mark Minervini, a two-time U.S. Investing Champion. His plan, called the Specific Entry Point Analysis (SEPA), uses a step-by-step filter for stocks showing solid upward trends, better relative performance, and quickening basic growth. The aim is to spot market leaders near the start of their main price advances, concentrating on power instead of trying to find lows. A vital part of this method is the Minervini Trend Template, a group of technical rules made to confirm a stock is in a clear, strong upward trend before it is reviewed for investment.
NVENT ELECTRIC PLC (NYSE:NVT) comes forward as a candidate that deserves review through this view. The company, which offers electrical connection and safety products, seems to fit the two requirements of the Minervini plan: showing a solid technical position and basic business speed.
A Solid Technical Base: The Trend Template
The Minervini Trend Template is created to remove stocks in poor or unclear trends, focusing only on those with clear, institution-supported speed. NVT's present chart shows a number of traits that meet this strict list:
- Price Above Important Moving Averages: The stock trades notably above its 150-day ($95.53) and 200-day ($86.92) simple moving averages (SMAs). This is a basic rule, showing the stock is in a long-term rising market stage, not a resting or falling stage.
- Correct Moving Average Order: Importantly, the 50-day SMA ($105.65) is placed above both the 150-day and 200-day SMAs, and the 150-day SMA itself is above the 200-day SMA. This "ordered" placement of shorter-term averages above longer-term ones is a standard sign of a good, speeding upward trend.
- Nearness to Highs: NVT's present price is within 25% of its 52-week high of $117.52, another Minervini rule. This focus on power makes sure investors are reviewing market leaders, not slower stocks that are only coming back from very low points. The stock is also more than 30% above its 52-week low, confirming a large recovery trend is already active.
- Better Relative Performance: With a ChartMill Relative Strength (CRS) score of 86.68, NVT is doing better than almost 87% of the market. Minervini states that the largest gainers usually have RS scores above 70, and ideally in the 80s or 90s, early in their advances, showing they are some of the market's strongest performers.
Meeting these technical rules proposes NVT is in what Minervini calls "Stage 2" – a confirmed upward trend where the most forceful price rises often happen. This technical condition gives the needed background for reviewing the stock's basic growth story.
The Support for Speed: High Growth Basics
While a strong chart is necessary, Minervini's plan states it must be backed by getting better basics. The "High Growth Momentum" part of the screen that found NVT searches for proof of speeding business results, which can act as a reason for more price growth. Recent data for NVT is positive:
- Earnings Speed Increase: The latest quarterly earnings per share increased by 44.4% compared to the same quarter last year. This shows a notable speed increase from the growth rates shared in the two earlier quarters. Such a good change is a main signal Minervini looks for, showing a possible recovery or breakout in business results.
- Strong Sales Growth: Supporting the earnings beat, last quarter's sales rose quickly by 34.8% year-over-year. Solid, speeding income growth gives a more lasting base for earnings growth than only reducing costs.
- Positive Estimate Changes: Analysts have been increasing their predictions, with the average estimate for next year's earnings moved up by 1.2% over the last three months. Upward changes often come before more institution buying, as they show growing belief in the company's future.
- Steady Performance: The company has exceeded earnings estimates in two of the last four quarters and income estimates in three of the last four, showing a habit of beating market expectations.
These basic points are important because, as Minervini writes, "big earnings draw big notice." When a company starts to notably beat expectations, it can start a re-rating by the market, pulling in new investors and supporting the speed already seen on the chart.
Technical Condition and Setup Value
Beyond the main Trend Template, a closer review of NVT's technicals shows a good structure. According to ChartMill's own study, the stock gets a high Technical Rating of 9 out of 10, showing its strong positive trends across many time frames. Maybe more important for an investor thinking about entry, it also has a Setup Rating of 8. This shows the stock is settling in a fairly narrow area after its earlier rise, a shape Minervini calls a Volatility Contraction Pattern (VCP). Such settlements can build force for the next possible breakout move. The study finds a clear resistance area just above the present price, followed by several set support levels below, which helps in planning exact entry and exit points to control risk.
For a complete look at the support, resistance, and trade setup suggested by this study, you can see the full technical report for NVT.
Locating Like Chances
NVENT ELECTRIC PLC shows a case where a strong technical trend, as described by the Minervini structure, is paired with recent basic growth speed. This pairing is exactly what the "High Growth Momentum + Trend Template" screen is made to find. For investors wanting to use this step-by-step method to locate other possible candidates, the screen is ready to use and change. **You can review the present results and rules of this screen here.
Disclaimer: This article is for information and learning only. It is not advice to buy or sell any security. The study is based on present data and a specific investment method, but past results are not a guide for future results. Always do your own research, think about your money situation and risk comfort, and talk with a qualified financial advisor before making any investment choices. Please read our full disclaimer here.
