NEXTRACKER INC-CL A (NASDAQ:NXT): A Strong Growth and Technical Setup in Solar Tracking

Investors often look for stocks that blend solid fundamental growth with positive technical setups, as this combined approach can highlight companies ready for upward movement. The strategy focuses on finding stocks with strong earnings and revenue growth (fundamental strength) while also showing technical patterns that hint at possible breakouts (technical strength). This method targets companies with both business momentum and potential for price appreciation. NEXTRACKER INC-CL A (NASDAQ:NXT) matches this description, displaying notable growth metrics alongside a consolidating technical pattern that could indicate a future rise.

Fundamental Strength: A Growth Leader in Solar Tracking

Nextracker works in the renewable energy sector, offering solar tracker and software solutions for large-scale projects. Its fundamental metrics are impressive:

• High Profitability: The company has a Return on Invested Capital (ROIC) of 22.81%, surpassing 97.85% of its peers in the Electrical Equipment industry. Its operating margin (21.47%) and profit margin (17.55%) are also top-tier.
• Consistent Growth: Revenue has increased at a 20.37% annual rate over recent years, while EPS growth has averaged 32.95%.
• Attractive Valuation: With a P/E ratio of 12.13, well below the industry average (33.06) and the S&P 500 (26.93), NXT seems reasonably priced given its growth potential.
• Solid Financial Health: The company has no debt, and its Altman-Z score (4.02) suggests minimal bankruptcy risk.

These fundamentals match the growth investing principles detailed in our introductory article, which prioritizes companies with high ROIC, growing margins, and scalable markets. For more details, check the full fundamental analysis report.

Technical Setup: Consolidation Near Support

From a technical standpoint, NXT shows an interesting setup:

• Consolidation After Gains: The stock has retreated from its 52-week high ($67.87) and is now testing a key support area between $53.79 and $53.98, formed by multiple trendlines across timeframes.
• Strong Performance: Despite recent declines, NXT has outperformed 76% of all stocks over the past year, showing continued investor interest.
• Healthy Trading Volume: Average daily volume (~2.38M shares) ensures good liquidity, lowering slippage risk for traders.
• Setup Rating of 7/10: ChartMill’s technical analysis points to a "nice setup opportunity," noting recent accumulation by large investors—a positive sign.

The current technical view suggests a possible reversal if the stock holds support. A move above resistance near $54.39 could signal renewed upward movement. For a closer look, see the technical analysis report.

Why This Combination Matters

Growth stocks with strong technical setups often benefit from a "virtuous cycle": improving fundamentals draw institutional buyers, while technical breakouts attract momentum traders. NXT’s mix of:

• Leading profitability in a fast-growing sector (renewables),
• Undervaluation compared to peers, and
• A bullish consolidation pattern near support

makes it an appealing choice for investors looking for growth and timing efficiency.

Finding More Opportunities

For those interested in similar stocks, our Strong Growth Stocks with Good Technical Setup Ratings screen identifies other companies with this strong blend of fundamentals and technicals.

Disclaimer: This article is not investment advice. Always conduct your own research or consult a financial advisor before making investment decisions.